Boohoo (LON: BOO) share price has been in a tailspin since last week as the company is set to release its earnings report on May 16. Shares of the online fashion retailer have perfectly met my predicted price target of 40p, which was mentioned in last week’s article. The latest analysis reveals that a relief bounce could be around the corner, but there’s a catch.
The UK stock market showed a mixed sentiment on Monday. Nevertheless, the benchmark FTSE 100 index was still up 40 points due to the positive price action in the bank shares. At press time, Boohoo shares were trading at 39p after a 3% drop during the initial hours of trading.
Boohoo Shares Tank As ASOS Reports Sales Decline
ASOS plc released its financial results last week. The latest results showed that the company had to face a significant decline in sales and a loss during the six months ending in Feb’23. This triggered a sell-off in not only the ASOS (LON: ASC) shares but also in its rival fashion retailer Boohoo Group plc whose earnings report is due this week.
Consequently, Boohoo share price plummeted by 13.69% in a single week. This was the biggest weekly drop in the shares of Boohoo UK since November 2022 and the sixth consecutive red week. Another major headwind for the stock was the $197 million settlement in a recent lawsuit in the US.
Boohoo Share Price Retests Yearly Lows
LON: BOO chart shows that the shares dropped to their lowest level since January 4 last week before having a bounce. The price rebounded just a few pennies above the yearly low of 35.5p, which suggests that there could be another drop to retest tag that level.
The RSI is signaling oversold on the daily and 4H timeframes, which suggests that the bounce might get some more follow-through. Nevertheless, my Boohoo share price forecast will remain bearish as long as the price remains below 50p. A beach of 37.47p may result in another drop to 32.65p, which is a major support on the chart. Tomorrow’s earnings report will be the key in this regard.
I’ll keep sharing my updated price outlook on Boohoo & other stocks in my free Telegram group, which you’re welcome to join.
