ITV share price has been in a downward trend in the past few months as growth and profitability concerns remain. The stock has crashed to a low of 64p, which is about 77% below the all-time high of 282p. It is also hovering near the lowest level since September 2020, giving it a market cap of over 2.58 billion pounds.
ITV is a leading TV and streaming company in the UK with millions of viewers on a daily basis. The firm operates several TV stations, a streaming service, and a studio. It makes most of its money from advertising and the rest through subscriptions.
The most recent results showed that the company’s external revenue jumped to £1.67 billion in the first half of the year. This was a 8% increase from the £1.54 billion it made in the same period in 2021. In the same period, its studios revenue rose to over £927 million while its advertising business rose by 5% to £910 million.
Despite strong results and the upcoming launch of ITVX service, ITV share price has dropped for several reasons. First, the viewership has declined in the past few months as people move back to their offices. This also explains why similar stocks like Netflix and Warner Bros. Discovery have retreated.
Second, inflation has jumped sharply in the UK. As a result, individuals and companies have slashed their budgets. Companies are not advertising as aggressively as they used to while consumers are cutting their subscription costs. At the same time, this inflation has affected the company’s profitability since it is paying much more.
Third, there are concerns about a recession in the UK, which will affect its revenues. Further, the company is facing substantial competition from social media companies like TikTok and Instagram while the pound has crashed by near 20% this year.
The daily chart shows that the ITV stock price nosedived in March after the company gave a dim outlook. It dropped by more than 28% in a single day and has not recovered since then. The stock has formed a descending channel that is shown in black. It also moved below the 25-day and 50-day moving averages while the RSI is below the neutral point.
Therefore, ITV share price will likely continue falling in the coming weeks as investors wait for another catalyst. A drop to 50p can’t be ruled out in the coming weeks. A move above the resistance at 67p will invalidate the bearish view.
This post was last modified on Sep 16, 2022, 07:06 BST 07:06