This FTSE 250 stock just crashed 36%!

It was a terrible Friday for shareholders FTSE 250 steady NCC Group (LSE: NCC). Shares in the cyber security and information assurance group fell today, following a profit warning.

NCC stock is almost half

On Thursday, the technology company’s shares closed at 153.2p. In this morning’s low, the stock has crashed to just 75.8p. That fell 77.4p, with shares more than halving their value, down 50.5% from rock bottom.

As I write, NCC’s share price has rebounded to 98.5p. This caused the stock to drop by more than a third (-35.7%) overnight. This is a brutal loss for shareholders.

Worse, at a 52-week high on 12 September 2022, NCC’s share price peaked at 245p. It has now lost almost three-fifths (-59.8%) of the top.

Here’s how the stock performed over seven different periods:

current price	98.5 p
One day	-35.7%
Five days	-39.2%
One month	-42.2%
Year to date	-50.8%
six months	-54.9%
A year	-46.1%
five years	-48.6%

This table shows that 2023 will be a year to forget for NCC shareholders. But what’s wrong?

The blues profit-warning

In an update, NCC warned that market conditions for US clients are deteriorating. Confidence collapsed after the failure of three tech-focused US banks.

Due to weaker demand, the group lowered its earnings guidance. In November, the NCC forecast group set an operating profit of around £47m in its latest financial year. This has reduced that figure to between £28m and £32m – a reduction of at least 31.9%. Hence, the stocks took a big hit this morning.

As well as the danger of a weaker North American market, NCC also said UK growth was also slowing, but at a lower rate. As a result, the forecast of revenue growth in the low single digits, versus the high single digits NCC established in the interim results.

In response to this expected fall, the NCC reviewed its cost base. This could lead to job losses at Manchester-based businesses.

With clients postponing or canceling orders, things could get worse before they get better for NCC. So where does this leave stocks?

FTSE 250 status at risk

After today’s collapse, NCC’s market value has dived to £307.3bn. About 30% of its peak value – reached in September 2021, a few months before the US tech bubble burst.

One setback is that NCC’s market cap has fallen so much that it is now the smallest company in the FTSE 250. Without a rebound in value of perhaps £90m to £100m, the group could be dropped from the mid-cap index next quarter. random.

If NCC were to exit the FTSE 250, some fund managers would have to sell these shares in order to meet their investment mandate. I suspect that will not be positive news for stocks.

What’s more, NCC’s final dividend yield of 4.7% per annum (covering 1.7 times) may be at risk if the group needs to conserve cash. So a dividend cut may be on the cards.

Finally, NCC’s stock price could rebound as technology spending finally picks up again. It could also be a takeover target that will be swallowed up by a larger tech rival. And cyber-security is a ‘hot button’ industry for future growth.

However, these FTSE 250 stocks are too dangerous for me right now!