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BT Share Price Has Collapsed by 50% in 5 Years. Is it a Buy Now?

LONDON, UK - JUNE 20TH 2015: The homepage of the official BT (British Telecom) webiste, on 20th June 2015.

BT share price has been a terrible investment in the past few years. The stock has collapsed by more than 45% in the past five years and is trading at the lowest level since November last year. The current price is also about 27% below the highest level this year. This means that £1,000 invested in BT Group five years ago would now be worth about £500.

BT Group main challenge

BT Group faces many challenges. For one, the company operates in the UK, an economy that is expected to sink into a recession in the coming months. Recent preliminary data shows that Brexit has been a major issue for the economy. At the same time, the company has seen its workers demand higher wages and the cost of doing business surge.

Still, the biggest challenge that BT faces is that its free cash flow is dwindling. This has happened due to the company’s elevated levels of capital expenditure and substantial deficit payments. It also has a substantial pension liability. While the situation has improved, BT is still not out of the woods

In addition, BT Group is battling substantial competition from the likes of Virgin Media. Its other products are also seeing more competition. Therefore, all these challenges make BT a relatively tough stock to recommend. 

BT share price forecast

The daily chart shows that the BT stock price has been a bad investment this year. The shares managed to collapse below important support levels at 172.55p and 153.80p, which were the lowest levels in March and May of this year. It has also dropped below the 25-day and 50-day moving averages while the MACD has moved below the neutral point.

Therefore, the stock will likely continue falling as sellers target the next key support level at 120p. A move above the resistance level at 153p will invalidate the bearish view.

BT share price