What Next after Recent Boohoo Share Price Weakness?

Summary:
• On September 28, The Boohoo share price briefed hit and traded at around the 30p price level following the news it posted low sales.

On September 28, The Boohoo share price briefed hit and traded at around the 30p price level following the news that it had failed to meet its sales expectations. Since then, the company has continued to trade in a horizontal market. 

Today, despite the share price going up by less than a percentage point, the financial report released late month continues to underline problems that have become uniquely Boohoo’s. The report also pointed out that some of the reasons why Boohoo had continued to suffer in the markets included increased costs, higher product returns and the company’s ongoing investment in warehousing, which had cut its bottom line. 

However, despite the recent drop and profit warnings that indicate the company may be in an even deeper hole by the time they release their yearly earnings in February next year, some investors are looking at the current price of 37p and seeing an opportunity of buying a great company at a cheap price.

At its core, Boohoo has all the fundamentals and market environment that can propel it to become profitable. However, recent events, including macros such as inflation, rising Bank of England interest rates, and cost of energy, have hindered the company’s growth and profitability. This, however, is not to say that the company is doomed, and some investors agree that Boohoo may be a discount company. 

Boohoo Share Price Analysis

In today’s trading session, Boohoo is up by more than 5 per cent. Since hitting the yearly price low of 30p on September 28, Boohoo’s price has also risen by 24 per cent to its current price. Therefore, whichever way you look at the company’s performance in the past few weeks, it has been aggressively bullish.

With today’s price surging by over 5 per cent, it is likely that we may continue seeing prices rising. We are highly likely to see Boohoo’s share price hitting the 50p price level again in the next few weeks and possibly trading above the 52p supply zone. However, if the price falls below the 30p price level, my analysis will be invalidated.

Boohoo Daily Chart