LONDON, UK - JUNE 20TH 2015: The homepage of the official BT (British Telecom) webiste, on 20th June 2015.
BT share price had a terrible performance in September as it crashed by more than 15%. The stock dropped to a low of 121.45p, which was the lowest level since February 2021. It has crashed by about 40% from its highest level this year, giving it a market cap of more than 12 billion pounds. This makes it one of the worst performers in the FTSE 100.
BT Group is a leading telecommunication company that has come under intense pressure in the past few months. The firm has faced the challenge of high cost of doing business in the country. Energy prices have been at elevated levels.
The stock also crashed as investors worried about the company’s debt burden as interest rates rose while the company’s employees have put pressure on the management to increase wages. Therefore, analysts believe that the company’s margins will continue to thin in the coming months.
BT Group has also been hit by the falling British pound, which has hit international investors. Sterling crashed to an all-time low in September of this year.
Meanwhile, the weaker British pound has made BT Group an attractive buyout target. According to Bloomberg, BT ranks high among companies that analysts believe will be acquired. Hopes of acquisition increased after billionaire Patrick Drahi acquired a 18% stake in the company.
Some of the other companies that could be acquired are Entain, a betting company, Playtech, a gaming firm, and Burberry. Others are Darktrace, National Express, and Vodafone. Still, a potential acquisition of BT Group faces numerous challenges. For example, the firm has a combined a pension liability of over 63 billion pounds. Also, an acquisition would see scrutiny from regulators because of the company’s role in the UK economy.
In my previous article, I warned that the BT stock price was significantly vulnerable. These fears have seen the stock drop in the past ten straight weeks. The stock managed to drop below the important support at 134.95p, which was the lowest level on 25th October. This price was along the neckline of the triple-top pattern that is shown in yellow.
BT share price has also moved below all moving averages. The Stochastic Oscillator and the Relative Strength Index (RSI) have crashed to oversold levels. Therefore, the stock will continue falling as sellers target the next key support at 100p. The stop-loss for this view is at 150p.
This post was last modified on Oct 03, 2022, 08:46 BST 08:46