Boohoo Share Price is Extremely Oversold. Too Cheap to Ignore?

The Boohoo share price sell-off has continued in the past few days as concerns about its growth have remained. The stock is trading at 84p, sharply lower than its highest level in 2020. Precisely, it has fallen by almost 80% from its all-time high. This means that if you had invested £10,000 in Boohoo on June 17th 2020, you would now have about £2,000.

There are multiple reasons why the Boohoo share price has been in a strong bearish trend in the past few months. First, the company is seeing significantly high costs like oil, gas, cotton, and labour prices have been in a strong bullish trend in the past few months.

Boohoo latest news

Second, as a growth company, Boohoo has struggled with the ongoing rate hikes by the Bank of England (BOE). The bank has boosted interest rates by 50 basis points in the past three months. And there are signs that it will hike rates multiple rate hikes later this year. Third, the Boohoo share price has fallen because of the company’s slow growth and weak guidance by the company. Analysts expect that its growth to keep slowing in light of the rising competition.

But there are also some positives. There is a likelihood that Boohoo could be a good acquisition target now that its stock price has become attractive. For one, this is a company with over £276 million in cash and an adjusted EBITDA of £173 million. Yet it is valued at just £1 billion.

Boohoo share price forecast

The daily chart shows that the BOO stock price has been in a strong bearish trend in the past few months. As a result, the stock has formed a death cross, which is usually a bearish signal. At the same time, a closer look at oscillators shows that the MACD, RSI, and Stochastic have moved to the oversold level. Therefore, the stock will likely rebound in the next few months. If this happens, the next key level to watch will be at 100p. The invalidation point for this view is at 75p.