This Stock Has Gained 10% Overnight After Crashing Almost 80% In Just 3 Weeks

This Stock Has Gained 10% Overnight After Crashing Almost 80% In Just 3 Weeks
Written by:
Michael Harris
24th March, 15:30
Updated: 3rd April, 04:37
  • Ventas to pay $1.2 billion in dividends to its shareholders
  • The real estate firm suspended 2020 guidance due to coronavirus uncertainty
  • Stock price trades at a 17-year low after crashing almost 80% in three weeks

The coronavirus outbreak has facilitated a gigantic market selloff, which now officially ranks as the fastest 30% selloff in the history of financial markets. For instance, shares of the real estate firm Ventas (NTSE:VTR) crashed nearly 80% in just three weeks to trade at a 17-year low.

Fundamental analysis: Ventas withdraws guidance, proceeds with the dividend payout

Ventas, a real estate investment trust dealing in assisted living communities, medical offices, and research centers, said it is withdrawing forward guidance due to the coronavirus uncertainty and tapped $2.75 billion in credit.

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“We have an incredible balance sheet and lots of strength and stability at Ventas,” it is stated. “That is a factor that, obviously, is among the most important things to be able to manage successfully through unprecedented times we’re in now,” said CEO Debra Cafaro.

However, the company still plans to go ahead with the planned dividend payout, unlike the vast majority of other companies that cancelled similar plans. Cafaro believes that the company’s management team has vast experience, having dealt with the 9/11 and 2008 financial crisis, to guide the firm through these troubled times.

“Because we’re in a strong financial condition and we understand the dividend’s importance, our board made a decision to declare the normal dividend and we will continue to be responsible to all of our stakeholders,” said Cafaro.

Ventas previously said it will pay out $0.79 per share to its shareholders, which will cost the company around $1.2 billion in total.

Technical analysis: Stock near collapse

Shares of Ventas have lost nearly 80% of their market value in just three weeks following the coronavirus outbreak. As a result, the stock price trades at the lowest levels since 2003. Yesterday, the stock price gained more than 6%, in addition to around 10% gains made in pre-market trading today, after the CEO confirmed the dividend payout.

Ventas stock weekly chart (TradingView)

As seen in the weekly chart, the price action literally crashed, and just six months after trading near record highs. The bulls were able to defend the key support around the $14 handle and cap further losses.

The bulls will now have to get back above the $28 mark to set up a base for a more substantial recovery. The key bull/bear line for the stock is at $46 and a key target for the bulls to regain.

Summary

Shares of Ventas have crashed around 80% in just three weeks amid the coronavirus outbreak and economic turmoil. As a result, the company withdrew 2020 guidance, and has decided to push forward with plans to pay a dividend to its shareholders, a decision that helped the stock price to modestly recover today.

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