Adidas’ share price is rising again. Is the stock now a buy?
- Adidas' revenues have been flat over the last three years, pushing the share price down.
- The company still remains in an attractive niche.
- The share price may have found a bottom at EUR 175.
Adidas AG (XETR:ADS) is the world’s second-largest sportswear company. The performance of the company’s shares, however, does not reflect the same image of success considering the sustained downward pressure.
Similarly, the revenues of Adidas have been flat. Nonetheless, Adidas stock is showing recoveries, having jumped more than 4% on Tuesday. But what has been ailing the company?
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Adidas’ attempts to grow revenues and market share through the fast-growing Chinese market have continued to face challenges. Chinese consumers have been boycotting international sportswear brands after they stopped buying cotton from one of the disputed provinces in China. Recently, Adidas hinted at leadership changes in its operations in China.
While Adidas’s share price has been on a decline, the stock is still one to watch. The market position and brand equity are key factors to consider as sporting activities return in full this year.
Besides, the increase in health-conscious young consumers will continue to grow the revenue prospects of the company. Many of the young consumers internationally are attracted to big brands like Adidas.
Adidas may have found the bottom at EUR175
Technically, the shares of Adidas have been on a declining trend since August 2021. Currently trading at EUR 182, the share price may have found a bottom with the likelihood of an upward trend starting.
However, investors should hold and wait for the bullish trend to be confirmed. RSI was recorded at 21.04, meaning that the share is currently oversold. While the RSI indicates a buy for the stock, MACD at -21.22 indicates that the trend has not yet reversed. The divergence between MACD and the signal is currently highest at -6.29. If the divergence reduces, investors may consider that the bullish has started. Until then, investors should wait.
Adidas is the second-largest sportswear company in the world. Despite the size, competition has been intensifying for Adidas, putting downward pressure on sales. The firm’s search for new growth markets in China was also hit by protests. Adidas stock is currently a wait as the key bullish confluence is yet to fully materialize.
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