ITV share price has crashed. Is it a buy ahead of earnings?

By:
on Jul 22, 2022
  • ITV share price has crashed by 46% from 2021 high.
  • The company’s ad and subscription business is slowing.
  • ITV will publish the latest earnings on July 28th.

ITV (LON: ITV) share price has been in a strong downward trend as investors react to the significant revenue and earnings decline. Shares of the former FTSE 100 company are trading at 70p, which is about 46% below the highest point in 2021. Its market cap has slipped to £2.8 billion.

ITV earnings ahead

ITV is a leading media company with a substantial market share in the UK. The company runs five television stations and iTV Hub. The latter is a streaming platform that gives users access to live movies and series.

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ITV makes money through both advertising and subscriptions. This explains why the stock has dropped sharply in 2022. Advertisers are slashing their marketing budget as the cost of doing business rises. 

At the same time, many subscribers are canceling their subscriptions as the cost of living rises. Also, competition in streaming has jumped sharply in the past few months. Some of the top companies offering these services in the UK are Netflix, Disney+, and Warner Bros among others. 

As a result, shares of most companies in the streaming industry have plunged hard in the past few months. This week, Netflix reported that it lost almost 1 million subscribers in the second quarter after losing 2 million more in Q1.

The next key catalyst for the ITV share price will be the company’s results that will come out on July 28th. The most recent results revealed that the company’s total external revenue rose by 18% to £834 million. ITV studios revenue rose by 23% to £458 million while M&E revenue rose to £545 million. 

Analysts expect that the company’s revenue grew at a slower pace in the most recent quarter. Still, the most important information to watch will be the progress of ITVX, an ad-supported streaming product that will launch later this year. It will have over 6,000 hours of content.

ITV share price forecast

ITV share price

The daily chart shows that the ITV stock price has been in a strong bearish trend in the past few months. Along the way, the stock has formed a descending channel that is shown in black. This week, it managed to move above the upper side of this channel. It has also crossed the important 25-day and 50-day moving averages.

Therefore, the stock will likely bounce back after the company publishes its quarterly results. If this happens, the next key resistance level to watch will be at 80p. A drop below the support at 65p will invalidate the bullish view.

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