Boohoo share price: Inverted C&H points to more pain ahead

August 24, 2023 03:22 AM PDT | By Invezz

Boohoo share price: Inverted C&H points to more pain ahead — Image source: Invezz

Boohoo is cheap but risky

Boohoo stock price has been in a steep sell-off in the past few years. It peaked at 432.4p during the pandemic, meaning it has lost over 92%. This decline happened as the company faced major headwinds, including competition, inflation, and concerns about its working conditions.

Today, Boohoo is a shadow of its former self, with its market cap standing at 418 million pounds. At its peak, it had a market cap of over 2 billion pounds. Therefore, long-term investors are betting on the company implementing a turnaround.

The most recent annual results shows that the company’s revenue dropped from £1.982 billion in FY’22 to £1.76 billion in FY’23. As costs rose, the company moved from a profit of over £7.8 million to a loss of £90.7 million. Its adjusted EBITDA dropped from £125.1 million to £63.3 million.

Analysts expect that Boohoo’s business will do relatively well this year. They expect that the company’s sales will be £1.77 billion this year while the adjusted EBITDA will move to £70.5 million. The management hopes that the company will turn a profit this year.

There are some positives for the company. For example, recent data shows that UK’s retail sales are doing well while inflation has started moving downwards in the past few months. As I wrote here, cotton prices have fallen, which could lead to higher sales.

Data by SimilarWeb shows that Boohoo’s website traffic has held steady in the past few months. Its website traffic in July came in at 16.3 million, down from 18.2 million in the previous month.

Boohoo share price forecast

BOO chart by TradingView

In my last article on Boohoo, I warned that the shares would fall to about 32.50p. This forecast was accurate as the shares are now trading at 32.95p. On the daily chart, the stock has moved below all moving averages. The shares are hovering slightly above the important support level at 32.0p, the lowest point in July and December last year.

Further, the Relative Strength Index (RSI) and MACD have all pointed downwards. Therefore, the outlook for the stock is neutral for now, with the next level to watch being at 32.03p. A move below that level will see it fall to the next key support level at 32.0p followed by 25p. This view is supported by the stock’s inverted cup and handle pattern.

On the higher side, a bullish breakout of the stock will likely see it rise to the key resistance at 41.06p.

The post Boohoo share price: Inverted C&H points to more pain ahead appeared first on Invezz.

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