Vestas Wind Systems (VWS) stock forms a death cross ahead of earnings

on Nov 1, 2023
  • Vestas Wind Systems shares have crashed by over 53% from the YTD high.
  • The wind energy industry is going through a major downturn as costs rise.
  • The company’s stock has formed a death cross on the weekly chart.

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Vestas Wind Systems (ETR: VWS) stock price continued its downward trend as concerns about the wind industry continued. The shares dropped by more than 2% on Wednesday after the surprise earnings report by Orsted. They have crashed by more than 53% from the highest point in 2022.

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VWS earnings ahead

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It has been a rough ride for companies in the wind energy industry. Last week, shares of Siemens Energy plunged by over 30% after the company sought guarantees from the German government.

And on Wednesday, Orsted shares plunged after the company wrote off $4 billion of its US wind business. Several other companies in the sector have crashed hard in the past few months.

The same is happening in the solar energy industry, where companies like Sunrun, and Enphase Enphase Energy have slumped in the past few months. At the same time, companies like BP and Shell have announced plans to scale back their clean energy goals

It is against this backdrop that Vestas Wind Systems will publish its third-quarter financial results on November 8th. Investors have low expectations from the company into earnings as high interest rates slow the industry.

For starters, Vestas Wind Systems is a company that provides wind turbines across three platforms: EnVentus, 4 MW, and 2 MW platforms. The company is likely seeing slow growth as demand in the sector worsens. 

The most recent financial results showed that the company’s order intakes grew by 8% in the second quarter. Its revenue jumped by 4% to over 3.4 billion euros. This growth was helped to 29% of services growth, which helped boost its margins.

The company ended the quarter with over 31.6 billion euros in backlog, with most of them being in the EMEA region followed by Americas and APAC. Now, with the industry slowing down, there is a likelihood that the company’s business will slow.

Vestas Wind Systems share price outlook

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Vestas Wind Systems

VWS chart by TradingView

The weekly chart shows that the VWS stock price has been in a strong bearish trend in the past few months. The stock has plunged from a high of DKK 318.4 in 2021 to a low of DKK 132.98. It has struggled to move from the support at DKK 132.98. As a result, it has formed what looks like a double-bottom pattern.

Vestas Wind Systems stock price remains below the 50-week and 200-week moving averages. The two have just made a death cross pattern, which is one of the most popular bearish signs in the market.

Therefore, the outlook for the stock is bearish, with the next key support level to watch being at 132.98. A drop below that support will invalidate the double-bottom pattern and lead to more downside to the psychological level of EUR 100.

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