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Why the Netlinkz share price crashed 9% lower on Wednesday

James Mickleboro
graphic image of cloud computed and data storage

The Netlinkz Ltd (ASX: NET) share price was out of form on Wednesday.

At the close of play the shares of the provider of secure and efficient cloud network solutions were down 9% to 10.5 cents.

Why did the Netlinkz share price tumble lower?

The Netlinkz share price has been on a downward trajectory in recent months. This may be due to profit taking after a stellar gain during the first seven months of 2019.

Not even an upgrade to its revenue guidance on December 16 has managed to stop the decline. The company lifted its FY 2020 revenue guidance by over 50% from $10.1 million to $15.3 million.

Nor has its funding announcement. Soon after the upgrade, the company revealed that it has entered into an agreement to raise $30.75 million in funding. This will be used partly to fund acquisitions.

Will things be better on Thursday?

Netlinkz may have better luck on Thursday following an after-hours announcement today.

That announcement revealed that it has completed the acquisition of Security Software International (SSI) Pacific for $10.2 million. SSI is the creator of the Virtual Invisible Network (VIN).

NetLinkz’ executive chairman, James Tsiolis, appears to believe SSI will be a great addition.

He said: “In SSI we have acquired a high quality, value accretive business that provides strategic synergies and global growth opportunities to NetLinkz. SSI has outstanding relationships in the Australian market, and we are excited to work closely with SSI to develop an innovative combined enterprise solution that meets the security and monitoring demands of these existing clients and modern businesses around the globe.”

“NetLinkz and its VIN software are complementary to the core offering of SSI and we believe that the additional security and innovative technological solution that VIN provides will be invaluable to SSI’s current client base and to any future client as we work toward global expansion of the business,” he added.

Also falling heavily on Wednesday was the PolyNovo Ltd (ASX: PNV) share price. The medical device company’s shares dropped 8%. This appears to be down to profit taking following a strong gain on Tuesday after the release of a sales update.

The post Why the Netlinkz share price crashed 9% lower on Wednesday appeared first on Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020