ITV share price is sinking: Here’s why it’s risky to buy the dip

November 10, 2023 07:52 AM PST | By Invezz
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ITV (LON: ITV) share price has crashed to the lowest point since October 2022 as concerns about its business continued. After peaking at 90.45p in February, the stock has plunged by more than 33% to the current 59.82p

Deteriorating metrics

ITV is a leading British broadcaster that is watched by millions of people every day. Like other companies in the industry, the company is going through major headwinds as demand for advertising dwindles. 

The most recent trading statement showed that the company’s revenue rose by 1% to £2.9 billion in the third quarter. This small increase was due to its Studios business. 

ITV Studios revenue rose by 9% to £1.56 billion while Media and Entertainment (M&E) retreated by 7% to £1.4 billion. ITVX revenue rose by 23%. In its statement, the management said that its organic growth will be about 5% to 2026.

In all, the company faces a bleak future as companies change their marketing strategy to deal with the new normal of slow economic growth and stagflation. Economic data published on Friday showed that the economy stagnated in the third quarter as it avoided a recession. 

The company also lacks more runway for growth since it generates most of its revenue in the UK. While ITVX is growing, the reality is that it is facing numerous competition from the likes of Netflix, Paramount, and HBO.

Therefore, it is hard to see where the company will get growth in the near term. It is also worth noting that this problem is not specific to ITV alone. Internationally, most television companies are struggling to find growth. 

In the United States, shares of Fox Corporation have dropped by over 13% in the past 3 months. Similarly, Warner Bros. Discovery and Disney have expressed concerns about their TV business.

ITV share price forecast

ITV chart by TradingView

The daily chart shows that the ITV stock price has been in a strong downtrend in the past few months. It has now crossed the important support level at 63.25p, the lowest swing in July this year. Further, the stock has remained below the 50-day and 100-day Exponential Moving Averages (EMA).

The stock also formed a head and shoulders pattern, which is one of the most bearish signs in the market. Further, the Relative Strength Index (RSI) has moved below the neutral point. Therefore, the outlook for the stock is bearish, with the next important point to watch being at 50p. If this happens, the shares will likely drop by another 15% from the current level. This view is in line with my previous ITV outlook.

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