Boohoo share price forecast: BOO could crash to 50p soon
- Boohoo share price collapsed after delivering weak earnings.
- Boohoo saw its profitability and revenue growth decline.
- The stock is approaching its year-to-date low.
The Boohoo (LON: BOO) share price collapsed by more than 11% on Wednesday after the embattled company published weak quarterly results. The stock fell to a low of 70.66p, which was the lowest level since March 9th this year. It has crashed by more than 82% from its highest level in 2021, bringing its total market capitalization to about 896 million pounds.
Boohoo quarterly earnings
Boohoo is a leading British e-commerce company that sells affordable clothing to a global audience. It has manufacturing plants in Leicester and other locations in the country. As a predominantly e-commerce company, it benefited substantially during the Covid-19 pandemic as demand rose.
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However, the company’s growth and reputation was hampered by allegations that the firm had bad working conditions in Leicester. While it has resolved those issues, the company has not recovered.
The company has also faced slowing growth as demand for online shopping has eased dramatically in the past few months. It is also facing logistics and supply chain challenges.
In a statement, the company said that its group sales rose to 1.98 billion in FY22 while its gross margin declined to 52.5%. The firm’s adjusted EBITDA declined to about 125 million pounds. This happened as the number of active customers increased to over 19.9 million. In total, its profit crashed by more than 110 million pounds to just 7.8 million pounds.
Boohoo is also fighting the intense competition from companies like Shein that sell cheap and classy clothing to a global audience. The firm was recently valued at over $100 billion in a private funding round.
So, is Boohoo a good buy? Some analysts believe that Boohoo is a good investment because of its strong franchise and the fact that it could become an attractive acquisition target.
Boohoo share price forecast
The daily chart shows that the BOO share price has been in a strong downward trend lately. The stock faced a strong resistance at about 99p in April and is now targeting the lowest level this year. It has also moved slightly below the 25-day and 50-day moving average while the Stochastic Oscillator has moved below the oversold level.
Therefore, the Boohoo share price will likely continue falling as bears target the next key support level at 50p. The only potential catalyst for the stock will be if a company becomes a buyout target.