RWS share price came under intense selling on Wednesday after unconvincing annual results. As a result, the stock crashed to a multi-year low of 326p, meaning that the shares have collapsed by over 55% from its all-time high of 739p. This performance makes it one of the worst performers in the FTSE 250 index. It has retreated by more than 34% year-to-date.
RWS was under pressure even before its weak earnings and guidance since it had fallen by 32% from its year-to-date high. This performance was mostly because of its exposure to Russia, a country that has been sanctioned by most western countries, Japan, and Singapore. It generates a substantial amount of income from the country.
RWS is a UK-headquartered company that provides a complete suite of services that target large multinationals. Some of its top clients are firms like Nielsen and Coca-Cola. According to its website, it provides its services to 90 of the top 100 global brands. Some of its services are in localizing and interpreting content and intellectual property. Its top products are Trados, Tridion, Language Weaver, and Inovia.
The RWS share price declined after it reported weak results and warned about its Russian business. Also, investors were disappointed because the firm announced that it would acquire Fonto, a Dutch company that offers data-authoring solutions for mission-critical documents. Its goal is to use the acquisition to help it become a key player in structured content.
So, is it a good thing to invest in RWS? Historically, we have seen that many companies that dip sharply after earnings tend to take time before they recover. For example, the Meta stock price crashed hard in February after reporting weak results. It is yet to recover. The same is true with DocuSign, which plummeted after its two past earnings. Their recovery usually happens after a long time. The case for RWS is made worse by the fact that the shares were falling even before the earnings.
The RWS stock price has been under significant selling pressure in the past few months. This trend culminated in the deep dive that happened on Wednesday. While the stock has bounced back a bit from its lows, I am not convinced that we are about to see a strong recovery in the near term. Therefore, like other stocks like Meta and DocuSign that have plummeted lately, the stock will remain in this range for a while.
Besides, it has already made a break and retest pattern by retesting the previous low at 394p. So this view will become invalid if the stock moves above420p.
This post was last modified on Mar 24, 2022, 10:45 GMT 10:45