ITV share price forms inverted H&S as ad revenue sink

on Nov 9, 2022
  • ITV share price crashed by more than 6% on Wednesday.
  • The company's ad revenue plunged by 14% in Q3.
  • The stock has formed an inverted head and shoulders pattern.

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ITV (LON: ITV) share price crashed by more than 6% after the broadcaster published weak results. The stock plunged to a low of 68.66p, which was lower than this week’s high of about 73p. The shares have crashed by more than 40% from the highest level this year. 

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ITV advertising revenue plunges

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ITV is a leading company in the UK media industry. The company has been under intense pressure in the past few months as companies slash their marketing budget. 

In a statement, the company said that its advertising revenue plunged by 14% in the third quarter. It also anticipates that its ad revenue will drop by between 1% and 1.5% this year. The decline was partly because of the death of the queen. While viewership increased during the period, many advertisers paused their campaigns.

In total, the company’s revenue rose slightly to 2.52 billion pounds in the first nine months of the year. This increase was mostly because of the strength of its Studios business. In a statement, the company said that it was actively thinking of strategic options for the division. It could sell a full or a small stake in the company.

So, is ITV a good buy now? ITV faces numerous challenges going forward. First, the company faces significant challenges as inflation keeps rising. This inflation has pushed the company’s cost of doing business significantly higher.

Second, with inflation rising, many companies are lowering their marketing spending in a bid to preserve cash. Further, the company is still facing numerous competition challenges from companies like Google and TikTok. It is also competing with the likes of Disney+ and Netflix.

ITV is also exposed to weak macroeconomic and geopolitical uncertainty. On the positive side, the company will likely be boosted by the upcoming World Cup event. 

ITV share price forecast

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ITV share price

The daily chart shows that the ITV stock price rose to a high of 73.36p. This was an important price since it was the highest level on August 12. The stock moved slightly above the 25-day and 50-day exponential moving averages (EMA).

It is forming an inverted head and shoulders (H&S) pattern. In price action analysis, this pattern is usually a bullish sign. Therefore, while ITV faces significant challenges, there is a possibility it will have a bullish breakout. In the near term, the stock could drop to the right shoulder at 60.88p.

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