Why is the EML Payments share price sliding?
Can EML's share price recover after falling 18% following the shock resignation of its CEO?
Shares in EML Payments (ASX: EML) are among the worst performing shares on the ASX on Monday, continuing their downward momentum in recent months.
At the time of writing, the stock had slid nearly 18% to $1.05.
By comparison, tech peers such as Wisetech Global (ASX: WTC) and ASX-listed shares in US payments giant Block (ASX: SQ2) were down around 1.2% each.
Share price drops as CEO walks away
EML shares have taken a hit after the digital banking and payments services business on Monday announced the sudden exit of long-time managing director and CEO Tom Cregan.
EML said Mr Cregan had resigned and would be replaced by former Nasdaq executive Emma Shand with immediate effect.
Ms Shand, who has been on EML's board of directors since September 2021, brings global experience in technology, capital markets and diversified financial services, including 16 years in senior management roles with Nasdaq.
In a statement to the ASX Peter Martin, EML's chairman, said, "This is an exciting time of opportunity for EML, and Emma has an ideal set of attributes to lead the company into the future. Emma will provide highly professional leadership through a period of very rapid change."
But shareholders disagree.
The news stunned the market, given that Mr Cregan had been at the company's helm for more than 10 years and has been instrumental in transforming EML from a small $3 million technology business into a diversified payments leader with a market cap of $500 million and operating in 32 countries.
He turned the Brisbane-based company into a high-growth business through a series of acquisitions in recent years that diversified its business model, attracting scores of retail investors and also interest from private equity.
But the company was already experiencing growth concerns
That rapid expansion has proven to be a burden for EML in recent months though, with its stock among the most shorted on the ASX as the shares slid more than 60% over the last 6 months amid concerns about its long-term outlook.
EML's woes started last year after the Central Bank of Ireland (CBI) imposed restrictions on its Irish card services business, Prepaid Financial Services (PFS), until a multimillion-dollar remediation program relating to ​​anti-money laundering and counter-terrorism financing concerns was completed.
​​The embattled group in April slashed its full-year guidance and warned of continued challenges in the troubled European operations.
Just weeks after affirming the guidance, it downgraded earnings by 13% at the midpoint to $53.5 million, and also said full year revenue and profit would be lower.
Such is its falls, that the company is defending a class action lawsuit around disclosure of its Irish woes after Shine Lawyers launched action in the Supreme Court of Victoria seeking compensation for shareholders who suffered losses after buying EML's shares in late 2020 through to mid-May 2021.
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