TUI Share Price Crash Sees No End. Is it Safe to Buy the Dip?

Summary:
• TUI share price continued its downward trend as investors remained concerned about the rising cost of doing business and flight cancellations

TUI share price continued its downward trend as investors remained concerned about the rising cost of doing business and flight cancellations. The stock dropped to a low of 127.45p, which was the lowest level since July 28 of this year. It has fallen by over 57% from its highest level in 2021, giving it a market cap of over 2.7 billion pounds.

Cost concerns remain

TUI Group is a leading company that is in the leisure, travel, and tourism industries. The firm operates over 1,600 travel agencies, five airlines that have 150 aircraft, and 400 hotels. It also has 16 cruise ships and destination agencies as it seeks to serve over 27 million guests in 180 travel destinations. The company’ divisions are hotels & resorts, cruises, TUI Musement, organizer, and airlines.

Because of its industries, TUI Group was affected greatly by the Covid-19 pandemic as most of its businesses stalled. It was forced to shutter its airlines, cruises, and hotels for almost a year. As a result, its debt soared as the cash burn continued. 

The company has now bounced back as the number of Covid-19 cases continues falling and as vaccination rates rise. Earlier this month, the firm said that it operated at 82% of capacity in its third quarter. It had over 5.1 million customers compared to the 4.2 million it served in the same period last year. Its free cash flow generation rose by €0.9 billion to €1.2 billion. 

Analysts expect that the company will continue doing well in the coming months as demand for tourism rises. However, the main challenges for the company are the ongoing flight cancellations and the rising cost of doing business. However, TUI Airlines has had fewer cancellations than other airlines.

TUI share price forecast

The four-hour chart shows that the TUI Group stock price has been in a strong bearish trend in the past few months. It dropped and reached a low of 120.95p, which was the lowest point in years. The firm then attempted to rebound but it found a strong resistance at 158p. This price was slightly below the important level at 166.50, which was the lowest point on March 7.

TUI shares remain below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) is slipping. Therefore, the stock will continue falling as sellers target the next key support level at 120.95p. A move above 133.50p will invalidate the bearish view.