Ardent Leisure (ASX:ALG) share price crashes over 65% today, here's why?

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Ardent Leisure (ASX:ALG) share price crashes over 65% today, here's why?

 Ardent Leisure (ASX:ALG) share price crashes over 65% today, here's why?
Image source: © Bezvershenko | Megapixl.com

Highlights

  • With a massive drop of over 65% to 47 cents in early trade, Ardent's shares were the worst performers on the All-Ordinaries index today.
  • The sharp fall in Ardent’s share price is likely because the pay date of its dividend is next week (13 July 2022).

Shares of entertainment company Ardent Leisure Group Limited (ASX:ALG) crashed today (5 July 2022) as the company is going ex-dividend on Tuesday (July 5).

Ardent's shares were 65.14% down, trading at AU$0.495 each on ASX at 2.05 PM AEST. With a 67% drop to 47 cents in early trade, the entertainment company's shares were the worst performers on the All-Ordinaries index today.

Why did Ardent shares crash so badly?

The sharp fall in Ardent's share price has nothing to do with the performance of the company. It is to be noted that the pay date of of Ardent’s dividend is coming next week (13 July 2022) and this seems to be the reason behind the massive crash in share prices of the company.

After the completion of the sale of its main event business in the United States to Dave & Busters, Ardent Leisure shareholders approved a capital return last week.

Ardent Leisure will distribute a sizable AU$455.7 million, or 95 cents a share, to stockholders on 13 July, 2022.

This consists of an AU$221.0 million capital return, or 46.0699 cents per share, and an AU$234.7 million unfranked dividend, or 48.9301 cents per share.

Investors who owned the company's shares at Monday's market closure were qualified for the refund. This implies that anyone purchasing Ardent Leisure stock today won't be eligible for either of these capital gains or dividends. Instead, the seller retains ownership of these refunds.

Divestment of US main event business

In an ASX filing on 30 June 2022, Ardent announced that it had completed the sale of its main event business to Dave & Buster’s Entertainment Inc for US$835 million.

Main Event offers the greatest amount of entertainment under one roof, including hundreds of arcade games, virtual reality, laser tag, modern bowling, and more.

Texas is the home base for Dave & Buster's Entertainment, Inc., which started operations in 1982. It is the operator and owner of 145 locations.

Image source: © Jjumawan | Megapixl.com

Ardent Leisure: Business update

Ardent Leisure also gave a business report for its theme parks & attractions division. According to Ardent, the potential value will be supported and unlocked using the money left over following the main event sale. This involves investing in brand-new, significant rides and attractions, renovating existing attractions, and paying for preliminary town planning work and council permissions.

A change in key managerial staff was also highlighted by Ardent Leisure.

Chris Morris, the president and CEO of Main Event, and Darin Harper, the group's senior financial officer, have departed the organisation.

Stock performance

Ardent's shares have fallen almost 65% since the start of July and the share have recorded negative growth of around 63% on a YTD basis.

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