Why SEEK Shares Just Suffered Their Worst Fall Since COVID
SEEK shares plunge 16% after reporting a $371 million annual loss
SEEK has suffered its sharpest share price decline since the early days of the COVID-19 pandemic, with shares plunging 16% after the online employment platform reported a significant statutory loss for the financial year.
The sell-off made SEEK the worst-performing company on the ASX on the day, with investors focusing heavily on the company's headline loss and weaker-than-expected profit outlook.
China business writedown weighs heavily
SEEK reported a statutory annual loss of $371.3 million, largely due to a substantial writedown in the value of its Chinese job-search business, Zhaopin.
The writedown came as China's economy continues to face slowing growth and elevated youth unemployment, putting pressure on the employment market.
The scale of the loss was a major concern for investors and contributed significantly to the sharp reaction in SEEK's share price.
Underlying earnings tell a different story
Despite the statutory loss, SEEK's preferred earnings measure showed a stronger performance.
Adjusted profit increased 28% to $199 million, indicating that the underlying business continued to generate earnings growth despite the significant China-related writedown.
However, investors appeared more concerned about the company's outlook than the improvement in adjusted earnings.
FY27 guidance disappoints investors
SEEK expects adjusted profit of between $185 million and $215 million for the current financial year.
The midpoint of this guidance sits below the $229.5 million Visible Alpha consensus estimate, raising concerns about the company's near-term earnings trajectory.
The weaker outlook, combined with the large statutory loss, gave investors several reasons to reassess the company's valuation.
Why the market reacted so sharply
The 16% decline represents SEEK's most significant sell-off since March 2020, when markets were experiencing the initial shock of the COVID-19 pandemic.
The reaction highlights how strongly investors can respond when a company's results combine a major writedown with guidance that falls below expectations.
While adjusted profit growth remains positive, the China-related weakness and softer FY27 outlook have clearly shifted investor sentiment.
What investors should watch next
Investors will be watching whether SEEK can maintain growth in its core employment marketplace while managing weakness in its Chinese operations.
The company's ability to deliver within or above its FY27 adjusted profit guidance will also be important in determining whether the recent sell-off proves temporary or signals a longer period of pressure.
For now, SEEK's sharp decline serves as a reminder that strong underlying earnings growth may not be enough to satisfy investors when significant writedowns and weaker forward guidance raise concerns about future performance.
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