- Summary:
- In the past few days, the Tesco share price has dropped by more than 13%. We explain why and what we should expect going forward
The Tesco share price has been under pressure in the past few weeks. It is trading at 217p, which is 13% below the year-to-date high of 250p. Other UK retailers like Sainsbury and Morrison Supermarket shares have dropped by 15% and 10% from their YTD highs.
The background: Tesco is the largest supermarket chain in the UK, with almost 4,000 stores in the UK. In the past few years, the company has exited some of its international markets like in Asia and Central Europe. The company also operates Tesco Bank.
Tesco had a relatively successful year since its business was considered essential meaning that it continued to operate as normal. Also, the company was helped by its strong e-commerce business that saw a significant increase. However, this division also led to higher costs as the company hired more delivery officers.
Tesco share price has dropped recently because of the ongoing worries about its growth. Analysts worry that the firm will not be able to replicate its strong performance this year. There are also worries about cost and the recent expansion plans by Amazon. The firm recently opened a small cashless store in the UK.
Tesco share price outlook
On the 4H chart, Tesco has been in a relentless sell-off recently after it formed a double-top pattern at 250p. It has dropped by 13% since then. The downward trend is also being supported by the 25-day and 50-day moving averages.
Most importantly, it has also moved below the important support at 219p, which was the lowest level on December 22. Therefore, it seems like bears have prevailed and that the shares will keep falling. If this happens, the stock could move below 200p.
TSCO shares chart
