Treat share price dropped by more than 30 percent following the announcement of expected poor performance by the company. According to reports, the company cut its pre-tax profit expectations from £21.7 million to a range of £15 to £15.3 million.
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The response in the markets was immediate and brutal, with prices dropping by almost a third. The drop also came from its announcement that it was struggling with input cost inflation and its decision not to pass on the inflation to customers due to the nature of certain long-term contracts. The company’s misfortunes were also blamed on the deteriorating tea market in the US, where revenue for the product fell by 41 percent in a year-over-year comparison.
Treatt’s chief executive Daemmon Reeve noted that despite the drop in short-term impact on profitability, other categories of the business were doing fine. He noted that he expected the company to recover and meet its expectations.
Treatt Share Price Analysis
Following the market’s bad performance report, the Treat share price dropped by almost a third of its value. Today, despite showing a strong push to the upside, with prices already up by 5 percent, a return to the levels it was trading three days ago looks like an uphill task.
Therefore, my Treat share price analysis expects the prices to start trading either in a sideways market or continue falling in the next few trading sessions. Part of the reason for this is that investors will be extremely wary of putting their money in a company that is down by a third of its value in less than a week. In addition, there will also be a concern on whether the company will return to its tea market in the US and become highly profitable again. These concerns, if they remain unaddressed, will put pressure on Treatt share price and likely results in a further push to the downside.