Megaport Earnings: Somewhat Slow Start to Fiscal 2024 Causes Irrational Panic… Again

Megaport typifies the overreactive short-termism of the market, and it continues to be an extraordinarily volatile stock. After nearly quadrupling within the past year to recoup about half of the 80% decline from its 2021 high, Megaport was down more than 15% in response to fiscal first-quarter results. Through it all, we’ve seen little change in the trends that underpin our investment thesis—fast revenue growth, ramping profitability, and services that will be in continually higher demand as more enterprises rely on data connectivity and cloud connections. Nothing in this quarter’s report changes our view, especially since the first quarter is typically slow and has often caused unnecessary worry. We’re maintaining our AUD 17 fair value estimate and see the stock as undervalued.