On the 18th of June this year, A Rich Life published an article asking: “Is EROAD (ASX/NZX: ERD) on the road to recovery following FY25 results?” A few days later Luke Winchester talked about a potential recovery for Eroad shares on the ASX Small Cap Wrap. At that time, the Eroad share price was under $1.50.
Subsequently, I did personally buy some Eroad shares at an average price of about $1.42 in early August.
Since then, the Eroad turnaround story has hit mainstream media. For example, on October 6 AFR scribe Gus McCubbing noted “small-cap specialist” Andrew Peros had offered Eroad shares as an “off the radar stock tip” and that Peros was “betting that EROAD will benefit from the federal government’s potential rollout of a road user levy on electric vehicles.”
Furthermore, on Livewire just 3 hours ago, Luke Laretive from Seneca touted Eroad shares as “a standout buy at the moment. And again, one of our top handful of weights.”
You can see how the media buzz has impacted the Eroad share price in the chart below.
This morning, Eroad announced that is previous guidance was too optimistic, and reduced its FY 2026 guidance from at least $205m revenue to no more than $203m in revenue. Eroad also downgraded its free cash flow margin and ARR guidance, as you can see below.
This article is merely a courtesy to our readers to let you know that I am now going to sell my Eroad shares, after waiting at least two business days from the time I publish this article. While I was a believer that Eroad shares were too cheap at $1.42, today’s update reminds me that it is a perennial disappointment and the simultaneous promotion of the stock in the AFR and Livewire makes me think that market sentiment is elevated.
Of course, I do expect the Eroad share price to fall today, erasing some of my profits, but life is too short to waste too much time thinking about a stock that I know is not one of the high quality multiyear compounders I am looking for. I’ll take what I can and consign it to the dustbin of my mind.
At the time of writing, the Eroad share price on the New Zealand Stock Exchange is down 20%. My base case would be for a similar fall on the ASX.
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Disclosure: The author of this article owns shares in ERD and will not trade ERD shares for at least 48 hours following the publication of this article. This article is not intended to form the basis of an investment decision and is not a recommendation. Any statements that are advice under the law are general advice only. The author has not considered your investment objectives or personal situation. Any advice is authorised by Claude Walker (AR 1297632), Authorised Representative of Ethical Investment Advisers Pty Ltd (ABN 26108175819) (AFSL 276544).
The information contained in this report is not intended as and shall not be understood or construed as personal financial product advice. You should consider whether the advice is suitable for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement. Nothing in this report should be understood as a solicitation or recommendation to buy or sell any financial products. A Rich Life does not warrant or represent that the information, opinions or conclusions contained in this report are accurate, reliable, complete or current. Future results may materially vary from such opinions, forecasts, projections or forward looking statements. You should be aware that any references to past performance does not indicate or guarantee future performance.