What happened
As of Friday morning's prices, shares of online insurance platform SelectQuote(NYSE: SLQT) had popped by 62% for the week, according to data provided by S&P Global Market Intelligence.
The company's stock price has been extremely volatile since it reported earnings results on Aug. 29.
So what
For the fourth quarter of its fiscal 2022, which ended on June 30, SelectQuote reported a loss of $0.64 per diluted share on total revenue of roughly $139.4 million.
The quarter included a little more than $48 million for what the company calls cohort/tail adjustment charges, which reflect lower insurance policy renewals than the company initially expected and have been ongoing for several quarters now.
"We are pleased with the progress we have made against the strategic redesign of our business. Our goal is to optimize our core senior and healthcare services businesses with a focus on improving returns and higher visibility in our projected cash flows," said CEO Tim Danker in the earnings press release. "Now six months into our strategic redesign, we have increasing confidence and high conviction that SelectQuote will create value for shareholders in the years to come."
SelectQuote guided for revenue in the range of $850 million to $950 million for its fiscal 2023, which would amount to growth of 11% to 25%, and a net loss of $89 million to $113 million.
Shareholders weren't happy with the report at all, and bid the share price down by about 47% last week. But this week, for no obvious reason, the stock has rebounded, erasing about two-thirds of that plunge.
Citigroup analyst Daniel Grosslight said in a research note to expect near-term volatility in the stock given the company's strategic shift and a lack of accounting transparency.
Now what
Given the strategic shift, difficult market conditions, and the chance of high volatility in the near term, I am staying away from SelectQuote until management can make further headway and show further progress on the transition.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
