FirstGroup share price death cross points to more pain
- FirstGroup stock price has been in a strong bearish trend.
- It has formed a death cross, where the 50-day and 200-day EMA have crossed over.
- The stock will likely continue falling in the near term.
FirstGroup (LON: FGP) share price has collapsed to the lowest level since March 2022. It has collapsed by more than 36% from its highest level on May 27, giving it a market cap of more than £695 million. It has fallen by about 4% this year.
FirstGroup faces challenges
FirstGroup is a leading transportation company that operates rail and bus services in the country. It has over 30,000 workers and makes more than £4.6 billion in annual revenue. The company has over 4,900 buses while its railway business has over 3,800 rail vehicles. It owns brands like Avanti West Coast, Great Western Railway, South Western Railway, and TransPennine.
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FirstGroup has had a mixed performance this year. On the one hand, the number of customers has jumped sharply in the past few months as the UK has reopened. At the same time, the company has faced inflation and staffing challenges. Earlier this year, the company’s Avanti brand made headlines as it was forced to slash services.
FirstGroup’s revenue in the first half of the year dropped from £3.1 billion in H1’22 to £2.2 billion. In the same period, its adjusted operating loss has dropped from £173 million to £57.7 million. The company ended the quarter with £7.3 million in net cash and £557 million of undrawn committed liquidity. This happened as the net debt surged from £234 million to over £1.47 billion.
FirstGroup expects that its business will continue improving in the coming months. It hopes that its change in pricing will lead to higher revenue and profits. Similarly, the company expects that its First Rail business will be more profitable.
So, is FirstGroup a good investment? The company faces significant challenges as interest rates rise as the cost of doing business rise.
FirstGroup share price forecast
The daily chart shows that the FirstGroup stock price has been in a bearish trend in the past few weeks. It dropped to a low of 90p, which was the lowest level since March. As it dropped, it managed to move below the important support at 100p, where it struggled to move below in October.
FirstGroup has moved below all moving averages. The 50-day and 200-day moving averages have formed a death cross, which is usually a bearish sign. Therefore, the stock will likely continue falling as sellers target the key support at 80p.