Boohoo

Here’s the simple reason why Boohoo share price is bouncing back

Boohoo share price is up by 3% today, extending the 27% gains it made yesterday. The shares are now trading at 295p, which is higher than this week’s low of 197p.

Boohoo pledges factor improvements

As you recall, Boohoo share price reacted angrily on Monday, a day after The Sunday Times published a story about the conditions in its factories. Sellers believed that the company would go through a PR nightmare that would have dire consequences to the company.

However, as I wrote on Wednesday, the company’s share price has started to bounce back. I argued that investors were merely overreacting to the news. For one, other leading companies like Nike and Adidas have been accused of doing the same thing. Moreover, most customers already know about the “fast fashion” companies. Since an average dress at Bohoo costs less than £20, they know that the factory workers don’t earn much money.

Boohoo share price is gaining because the firm has committed to improve its practices. It did this by launching an independent investigation that it hopes will help it do better. Also, independent investigations by journalists from Gangmasters and officials from the Labour Abuse Authority found no abuse in its factories in Leicester.

More so, upbeat statements from HSBC, Peel Hunt, and Societe Generale helped to support the share price. At the same time, the decision by Jupiter Asset Management to boost its stake in the company reassured investors about the company.

So, is Boohoo share price a buy?

As shown on the chart below, Boohoo stock price declined to a low of 198p this week. This price was slightly above the 78.6% Fibonacci retracement level. Today, the shares rose to a high of 309, which is slightly below the 38.2% Fib level.

It is also still below the 50-day and 100-day exponential moving averages. Therefore, the price is likely to continue going up because the fundamentals of the firm have not changed.

On the flip side, a move below 245p will invalidate this trend. This price is the lowest point yesterday and also slightly above the 38.2% retracement level.

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Boohoo stock price analysis

Boohoo share price

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