The BT share price collapsed to the lowest level in more than 6 months as investors continued to worry about competition. The stock declined to a low of 146p, which was about 29% below the highest level this week. This means that the stock is in a deep bear zone.
Why did BT collapse?
The BT share price declined sharply as investors reacted to news that Sky was about to make an investment in Virgin Media O2. The investment will help the company upgrade about 14 million homes and businesses to ultrafast broadband.
As such, analysts expect that the company will put pressure on BT, which is current market leader in the industry through its Openreach product. At the same time, Virgin Media is talking with Vodafone and TalkTalk. The two companies will biome wholesale customers.
Meanwhile, BT is spending more than 15 billion pounds to upgrade its network. Precisely, it is investing in order to move its 25 million customers from copper phones to full-fibre by 2026.
BT share price forecast
The BT share price has been in a major sell-off in the past few months. This decline will likely outrage Patrick Drahi, the company’s biggest shareholder. As such, there is a high likelihood that he will intensify its talks with the management. He could also encourage the firm to break itself up or even to explore strategic options.
On the four-hour chart, we see that the decline happened after the company formed a rising wedge pattern, which is usually a bearish sign. It also formed a bearish pennant pattern. It remains below the 25-day and 50-day moving averages.
Therefore, the stock will likely keep falling as bears target the next key support level at 140p. On the flip side, a move above the resistance at 155p will invalidate this view.