Tesco share price is under intense pressure. It has dropped by more than 2% making it the fifth worst-performing stock in the FTSE 100 today. It has also dropped in the past six consecutive days and is down by more than 4.50% since January 7. Other retailers like Sainsbury’s, Ocado, JD Sports, and Morrison are also struggling.
What happened: Tesco became the next retailer to report strong holiday sales. The company said that its sales in the 19 weeks to January 9 soared by 5.6%. This increase was driven by the strong performance of its e-commerce channels, which soared by 80%. The firm also reiterated its forward guidance, saying that its profits will be on the same level as in 2019.
Why Tesco share price is falling: Tesco stock is falling because the company did not boost its profit target as Sainsbury’s did last week. Also, the firm lamented that higher revenue has been put in check by the rising operation costs. These costs are set to rise to more than £810 million this year.
Another concern for Tesco and other retailers is that the Brexit agreement reached has led to more costs. For example, early this week, truckers from the European Union said that they would be forced to hike prices to cover for the additional costs. Further, there’s a question about whether Tesco can maintain last year’s momentum.
TSCO share price forecast
The TSCO share price dropped to an intraday low of 235p today. As it did that, it moved below the vital support at 236p, which was the highest level on November 19. On the four-hour chart, the price is between the 25-day and 50-day EMAs and slightly above the 23.6% Fibonacci retracement level.
Therefore, I suspect that the downward momentum will continue as bears target the next support at the 38.6% retracement at 230p. This price is about 3.50% below the current price.
Tesco share price chart