Hard road to travel

When a share price falls off a cliff, it could be a huge overreaction to a whiff of bad news, or it could be that there is something rotten in the state of Denmark.

In the absence of any genuinely handy inside information about the company’s finances, the cautious investor will think back to Steinhoff and run for the hills, while devotees of a messy bottom will sniff an opportunity and fill their boots in the manner said to have been perfected by Nathan Rothschild around the time of the Battle of Waterloo.

Transaction Capital has been doing what it can to point the punters towards the latter after it shocked the market with the news that earnings in its SA Taxi business were still not back to pre-pandemic levels and that it was raising its bad debt provisions by more than R1.8bn. There’s little doubt that the taxi industry in general is in a mighty tight squeeze, with customers heroically resisting any thought of a price increase while fuel costs are through the roof, passenger volumes are down and load-shedding is helping to make the roads look ever more like the chariot race in Ben-Hur.

The general aroma was not helped by the market waking up to the fact that CEO David Hurwitz had anticipated the arrival of Santa Claus by selling 42% of his holding in the company back in December, hardly a ringing vote of confidence in Transaction Capital’s future no matter how you spin it.

On the positive side its used car business, WeBuyCars, continues to grow market share, but the taxi side poses many a question mark.