Jump to content

AO World hovers near record lows as gloomy outlook persists ahead of trading statement

Recommended Posts

Despite edging up from their record low, AO World shares reflect the tough outlook for this online retailer.

bg_uk_retail_shoppers_1369081.JPGSource: Bloomberg
 Chris Beauchamp | Chief Market Analyst, London | Publication date: Wednesday 13 July 2022 

Fundraising and tough outlook drives rout in AO World shares

Retailer AO World has seen its share price collapse over the past year, falling by 90% from its post-pandemic highs.

The changed world of the past year has seen interest rates rise and inflation surge. Both of these have put severe pressure on consumer spending, as shoppers find themselves paying higher prices while having less money to spend as rates on loans and mortgages rise.

For retailers like AO World, which came to prominence in the era of ultra-low interest rates, there are additional problems. Borrowing now costs more, and leaves less room to plough funds into expansion and keeping prices low.

Thus, just as the outlook for earnings darkens, companies find that the cost of doing business is going up. This was the reason behind the capital raise recently, but as we head towards the firm’s trading statement there is still little reason for optimism.

AO World share price – technical analysis

Like other retailers such as ASOS, AO World has seen its share price decline relentlessly over the past 18 months. There is a clear downtrend in place, marked by declining 50-, 100- and 200-day simple moving averages (SMAs). In addition, rallies have been short-lived and weak, indicating little appetite by buyers to step in.

From 80 pence at the end of May, the shares halved to just 40p in early July. The slight bounce we have seen since then will likely result in a fresh selling opportunity. There is a long way to go before the shares could be said to have broken the downtrend.

AO_World_130722.pngSource: ProRealTime
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 27/01/23 14:26
  • Posts

    • USDJPY has been regaining ground this week, but inflation differentials and a three-month trend signal the potential for another turn lower Source: Bloomberg      Joshua Mahony | Senior Market Analyst, London | Publication date: Friday 27 January 2023  USDJPY set for third monthly decline The USDJPY pair has been on the slide since its October high, with the historical 147.63 resistance level ultimately marking the end of the dramatic 21-month rally that saw the pair gain almost 50%. Much of that came through a period that saw US inflation soar as Japanese prices remain subdued. That disparity remains, but the direction of travel has certainly shifted as US CPI declines and Japanese price growth gradually ticks up. The overnight 4.3% figure for Tokyo core CPI represents a four-decade high, with the nationwide figures likely to follow on. The chart below highlights how USDJPY has been heavily correlated with the now tightening gap between US and Japanese inflation. However, it is more evident when shifting that inflation differential forward by seven-months. That close correlation highlights the potential for further downside as long as prices continue to trend in a similar manner. Source: ProRealTime Looking at the daily chart, the recent rebound has taken price up towards the top-end of a descending channel and Fibonacci resistance. This highlights the bearish pattern that has been playing out, with lower highs and lower lows in place in recent months. Unless we see price rise through trendline and 134.77 resistance, another turn lower looks likely for this pair. Source: ProRealTime
    • @MongiIG Hi - You recently covered Long NICKEL Trading the Trend and A. Rudolf did this morning but I see it is Closing only. Please clarify, Thanks D600
    • At the expire date IG sell/buy price is 93.8/94.95 and Bloomberg price is 92.12 Assume I bought at 100.0 If I close the trade myself I lose (100-93.8) = 6.2 If the trade expires I lose (94.95-93.8) + (100-92.12) = 1.15 + 7.8 = 9.03 Is that right?    
  • Create New...