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BT Group Share Price Is at Risk of a 10% Meltdown

London FTSE 100

The BT Group share price was the worst performer in the FTSE 100 index on Monday. The stock declined by more than 3% and ended the day closer to its lowest level since May 20th. This brought its total market capitalization to more than £18.65 billion.

Why BT Group stock is struggling

The BT Group share price has dropped by more than 18% below its all-time high. This performance is mostly because the company’s recent earnings report disappointed as they missed the consensus forecast. In total, the firm reported a pre-tax profit of £536 million, which was relatively higher than what analysts were expecting. But its revenue of more than £5.07 billion was lower than the expected £5.25 billion.

The stock has declined recently as investors remain concerned about the rising competition in its industry. Recently, its top competitors like Vodafone have intensified their investments in the broadband service. Indeed, in a recent report, analysts at Berenberg predicted that the company’s Openreach revenue will stagnate in the second half of this year. This is the most important division for the company and is the one that is providing most of its growth.

At the same time, the BT share price has declined after Virgin Group challenged the company’s wholesale data package. In a report, Virgin said that the pricing structure of these packages could help push smaller companies out of business. Ofcom, the UK regulator is currently receiving submissions about the company’s pricing plan.

The share price has also stagnated as investors wait for more progress on the company’s sports media business. Recently, the firm said that it was exploring options about this division. It also attracted partnership bids from ITV and Rupert Murdoch. Still, the firm has not said a word about the deal recently.

So, is BT Group a good investment? Fundamentally, BT is a strong company that is relatively undervalued compared to its global peers. It also offers an attractive dividend and has a strong market share in both voice and broadband.

BT share price forecast

The daily chart shows that the BT share price has been in a major sell-off recently. The stock has declined by more than 15% in the past few weeks. In my past articles, I noted that this price action was partly because the company was in its fourth stage of the Elliot wave pattern. The stock remains slightly above the 38.6% Fibonacci retracement. Therefore, the Elliot view will be invalidated if it manages to move below this retracement at 164p. 

Meanwhile, the shares remain below the 25-day and 50-day moving averages. In fact, it has formed a bearish reversal pattern, which is a bearish thing. Therefore, if the shares move below 164p, the next level to watch will be at 150p, which is along the 50% retracement level. The bearish view will be invalidated if the stock rises above the 23.6% retracement level at 180p.

BT share price