The WPP share price bounced back even after the company reported a 2.79 billion pounds annual loss in 2020. The stock rose by 1.30% to 923p in London after the annual earnings results.
What happened: WPP, the giant advertising giant reported relatively weak anual results as global advertisers reduced their marketing budgets amid the pandemic. In total, the company made a 2.7 billion pounds annual loss compared to a profit of more than 1.21 billion in the previous year. This loss was partly because of a 3.1 billion pounds impairment charges.
In total, the company made a total revenue of more than 12 billion, which was 9.3% below the previous year.
Why it matters: So, why did the WPP share price rise after the weak results? There are three main results for this. First, all analysts were expecting the firm to record weak results because of the pandemic. Second, the company made a good forecast since it has started to win some more clients. It expects its revenue to rise by mid-single digits this year.
Some of the new clients wins are companies like Uber, Intel, and Alibaba. Most importantly, the firm said that it will relaunch its buyback scheme immediately.
After dipping in the first quarter of 2020, WPP share price made a swift recovery. It has jumped by more than 16% this year and more than doubled since March last year. On the daily chart, we see that the stock broke-out above the important resistance level of 856p on February 26. This was the previous highest level.
The stock has also formed an ascending channel that is shown in purple and moved above the 25-day and 50-day weighted moving averages. Therefore, in my view, the stock will keep rising as bulls target the next key resistance at 1,000p. However, a decline below 856p will invalidate this thesis.
