Boohoo’s share price has crawled back in the past few days as UK stocks stabilize. The BOO stock is trading at 60.50p, slightly above the year-to-date low of 51.74p. However, it has crashed by more than 85% below its all-time high, bringing its total market cap to over 748 million pounds. Other e-commerce companies like Asos and Ocado have all plunged.
Some Boohoo costs are falling.
Boohoo stock price has been in a strong bearish trend in the past few months as the company battles multiple challenges. For example, the cost of doing business has risen sharply recently while demand has plateaued as most people shift to staples. At the same time, companies like Shein are concerned about the soaring competition in the industry.
In the most recent trading statement, Boohoo estimates its revenue growth for FY23 will be in low single-digits. This is a substantially low rate for a company that is seen as a growth stock. It also estimates that its EBITDA margins will be between 4% and 7%.
The outlook for Boohoo is relatively dim. However, there are signs that the situation is improving. For example, according to Bloomberg, ocean shipping costs are falling as competition rises and the economy slows.
At the same time, commodity prices like cotton has dropped to the lowest level since September last year. This is notable since Boohoo relies on cotton to make its products. Other comMoreover, otheries that are vital in the supply chain have all dropped sharply. Herefore, there is a likelihood that the stock will bounce back as costs stabilize and demand crawls back.
Boohoo share price forecast
In my last article, I made a bullish case for the BOO stock price. Since then, the stock has continued hovering near its lowest level in years. However, the stock remains slightly below the important resistance level at 63.16p. The Relative Strength Index (RSI) has moved close to the neutral point.
Therefore, there is a likelihood that Boohoo’s share price will rebound in the next few months. If this happens, the next fundamental resistance level to watch is at 80p. A drop below the support level at 55p will invalidate the bullish view.