FTSE All-Share Index: positive outlook sends AO World shares up 15%

[MongiIG]

Despite a drop in revenues and profits for the first half, alongside a warning about under-pressure consumers, an improved outlook has boosted shares in AO World.

 

 Jeremy Naylor | Writer, London | Publication date: Tuesday 22 November 2022

The online white goods retailer AO World has been in the news this morning for all the right reasons.

And in fact, it's one of the better performance of the FTSE All-Share Index in today's session on this Tuesday as a result of first half (H1) numbers that the company has come out with, despite the fact they’ve seen revenue down 17% to £546 million and adjusted EBITDA down by a margin of 11% to 9 million.

It's been the outlook that investors have been most interested in and traders who are long on this stock saw numbers this morning have made an enormous amount on the upside.

AO World share price chart

Let's take a look at the share price chart because I think it's worth looking back the left hand side here where we saw this big blue box, AO World was trading at 47p before the lockdown.

Then came the lockdown. And everybody who needed white goods, be it washing machines or dishwashers or whatever, had to go online. And indeed, AO World saw its stock up 841%.

Now, we now know that that was far too far beyond the value of the company since there has been this pullback. But interesting enough, over the last six weeks or so, we've seen an increase now which has been further given a boost on the upside by today's news - up 61% from the lows that we had back on the 8th of July.

The stock is up more than 15% today whilst it forecasts adjusted core profit for the year at the top end of the £20 million to £30 million range outlined in August.

The CEO was particularly upbeat and hopeful for England's prospects in the World Cup, saying the sales of television sets could get a boost if England reaches the final stages of the soccer World Cup.

What difference that would make would be interesting to see. I can’t think many people are going to be buying more washing machines, but certainly televisions were uppermost in the mind of the chief executive of AO World.

But whichever way you cut it, despite the fact that the company is warning about the uncertain consumer environment because of the challenging conditions brought about by rising interest rates and the fact that people are finding it more and more difficult to make budgets meet.

On the other hand, when they wanted white goods, they had to go somewhere and AO World was the preferred choice for many, according to chief executive.

The stock is up more than 15% on this Tuesday after first half earnings.