As the ZIM Integrated stock price dips, is it safe to collect?

on Mar 19, 2024
  • ZIM Integrated is going through substantial headwinds.
  • The shipping industry is struggling as costs rise and demand falls.
  • ZIM will benefit from higher spot shipping costs in the first half.

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ZIM Integrated (NYSE: ZIM) stock price has nosedived in the past few weeks as the momentum we saw earlier this year faded. It has also crashed as concerns about the shipping industry remain and as spot container prices dive. The stock retreated to below $10 on Monday and is hovering at its lowest point since December 18th.

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Challenging new normal

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ZIM Integrated share price has slipped after the company cautioned about the shipping industry in general.

In a statement last week, the management noted that the recent freight rates would have a positive impact for the company in the first half of the year. They then cautioned that barring any major development, the revenue slowdown will resume in the second half of the year.

ZIM Integrated also cautioned about the difference between the current shipping prices surge and the one that happened during the Covid-19 pandemic. The latter surge happened because of elevated demand for goods because of lockdowns and stimulus packages.

On the other hand, this surge is happening because of the supply element as shipping companies are forced to use longer routes because of the disruption at the Red Sea. As a result, the implication is that shipping costs will be moderately volatile this year.

ZIM Integrated Shipping published weak financial results as expected. Its revenue plunged by 59% YoY to $5.2 billion in 2023 as the average freight rate dived to $1,203. Data by Drewry shows that the average rate now stands at $3,100, down from the YTD high of $4,000.

Shipping rates

Drewry World Container Index chart

ZIM Integrated also reported a sharp drop of free cash flow, which came in at $128 million, down from $1.05 billion in 2023. It also boosted its total debt by over $666 million as the company upgraded its vessels. It now has 150 vessels and the number will get to 157 soon. 

ZIM and other shipping companies are operating in a blurry environment, where they are unsure about what will happen this year. This explains why the company’s guidance of EBITDA for the year should be taken with a grain of salt. 

The company hopes that its adjusted EBITDA will be between $850 million and $1.45 billion while adjusted EBIT will be minus or positive $300 million. The CFO said:

“We assume average freight rates to be slightly higher than in 2024 as compared to 2023. We also expect the first quarter and potentially second quarter to benefit from current higher spot rates in certain trades.”

ZIM Integrated stock price forecast

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ZIM Integrated stock

ZIM chart by TradingView

So, what next for the price of ZIM shares? On the daily chart, we see that the ZIM stock price peaked at $15.57 this year. It has now dropped sharply as concerns about its revenue growth in this market environment remain.

The stock has dived below the 50-day and 25-day Exponential Moving Averages (EMA), which have made a bearish crossover recently. It has also formed a rounded-top pattern, which is a popular bearish sign. Also, it has created a bearish flag pattern.

Therefore, the outlook for the stock is still bearish as concerns about the company continue. If this happens, the next level to watch will be the psychological level of $8. This view is in line with my last ZIM stock forecast.


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