Publication date: Dec. 11, 2024

On the Amsterdam Stock Exchange, Technology companies play a big role. Think of heavyweight ASML. The lesser-known Prosus is the second largest participant in the Technology sector within the AEX after ASML. Moreover, Prosus' share price has experienced a fantastic increase of over 50% in 2024. Time for a closer look as there seems to be more in store for the coming years.

Prosus; brief introduction

Prosus was founded in 2019 and is a subsidiary of South African media company Naspers. It operates as a global technology company and investor, specializing in internet platforms and digital services. It is one of the largest technology investors in the world and focuses on companies operating in sectors such as e-commerce, online marketplaces, fintech, education and social media.

Prosus owns a significant stake in Chinese tech company Tencent, one of the world's largest technology companies. This investment is one of Prosus' most valuable assets and makes up a large part of its market value.

In addition, Prosus invests in companies active in online marketplaces such as OLX (an online advertising site) and Letgo, has stakes in several food delivery platforms including Delivery Hero, and invests in digital payment platforms such as PayU.

Prosus often focuses on growing markets such as Asia, Africa, and Latin America.

What is the current situation at Prosus?

Prosus has published strong financial results with a significant increase in earnings in the first half of the fiscal year. Net profit totaled $4.58 billion, up from $3.37 billion in the same period last year.

Sales from continuing operations increased 16% to $2.96 billion, driven by growth in the e-commerce sector and improved profitability at companies such as Tencent. In addition, Prosus increased its free cash flow sixfold to $725 million, further strengthening the company's financial position. These developments put Prosus in good standing with banks' fundamental analysts.

What is the outlook for Prosus' share price?

As reported, the banks are positive and UBS even speaks of a €65 price target. Currently, the price is around €40.

If we analyze the price through our mathematical model, the expectation is also positive.
Below is the chart of Prosus over the past 5 years.

On the left, you can see the well-known price dip in 2020 due to COVID-19 and the subsequent huge rebound from €21 to €50. Technology companies have huge potential but can also be hit hard in downtimes. After the top at €50, Prosus goes into free fall and hits €18 twice. From the end of 2022, the price shows a nice trend and may become the winner of the AEX-Index in 2024 with a rise of over 50%.

In September, the price broke out above the technically important limit of € 36.50 and has recently corrected nicely. Important for the timing of the buy is a closing position above € 41.80. The green arrow indicates the first price target at € 50. After a correction, the multi-year price target is € 57.50.



Conclusion

Prosus is a volatile stock with a lot of potential, typical of the Technology sector. The company's performance is excellent, and the share price shows a nice trend. With a closing position above €41.80, the upward trend is confirmed again, and you can consider taking the stock into your portfolio with an initial target price of €50. After that, a correction is expected to reach the long-term price target of €57.50.