The Boohoo share price is down sharply today after the online retailer said it would buy Dorothy Perkins, Wallis, and Burton. The shares fell by more than 5% and are trading at 346p, which is the lowest level since early last week.
The background: Philip Green’s Arcadia Group went into administration in 2020 because of the impact of the coronavirus pandemic and high debt levels. The company was not the only high-street retailer that went out of business. Others include Debenhams, Bonmarche, and M&Co also filed for bankruptcy.
In the past few months, administrators have been trying to sell parts of these companies. Early this year, Boohoo announced that it would acquire the digital assets of Debenhams in a decision that risked thousands of job losses.
And today, the firm said that it would acquire the digital assets of Arcadia Group in a deal valued at more than 25 million pounds. Also, this decision risks thousands of jobs since it does not include physical real estate. In fact, in the statement, the company said that it will only retain about 250 employees. Therefore, Boohoo share price is probably falling because investors believe the acquisition is risky.
Boohoo share price forecast
On the daily chart, we see that the Boohoo share price has been in an uptrend recently. It has risen by more than 60% from its lowest level on October 19.
Also, it has remained above the ascending black trendline in the past few weeks. It is also above the 25-day and 15-day exponential moving averages. Therefore, in my view, Boohoo share price will remain in an uptrend so long as it is above the ascending trendline.
BOO share price chart