On Friday, Boohoo (LSE: BOO) The stock price has exceeded 13%.This happened after a sharp drop from the previous day’s release Third quarter results.. The rise on Friday was good news for investors in the short term. But over the past year, Boohoo’s share price has fallen sharply, down 60%. In addition to this, today the market share is down about 4%. Now that stock prices have fallen sharply during this period, is it a good time for me to buy? Let’s take a closer look.
Boohoo’s share price plummeted by more than 25% after the results were first announced on December 16. This was due to a decline in the company’s EBITDA and net sales outlook. However, the next day, the stock price soared. I think this is because investors have realized that the results are not as bad as they look.
In the three months to November 30, 2021, total sales increased by more than a quarter. These sales also increased by 58% and 102%, respectively, compared to FY2009 and FY2008. These positive numbers are primarily due to the strong demand for products in the UK market. In addition to this, the business was able to significantly increase its market share during the pandemic. Being an online-only retailer, customers flock to buy Boohoo products because their physical stores are closed.
I think this will bring out the power of Boohoo in the coming months. Following recent news about Omicron variants, the UK government is considering tightening regulations. If this extends to another blockade, it could help boost Boohoo’s sales even further. We also hope this will help Boohoo’s stock price continue to rise.
However, in the third quarter results, CEO John Lyttle emphasized:Pandemic confusionIt was hindering the growth of the international market. Growth in the UK seems encouraging, but if Boohoo can’t boost international demand, Boohoo can struggle. If growth stagnates, Boohoo’s share price is expected to fall further.
Stock price concerns
The company still faces other challenges. Boohoo has been in the limelight for the past year, with multiple news articles damaging the company’s reputation.
For example, the Boohoo-supplied Leicester factory reportedly paid workers only £ 3.50 per hour. In addition to this, the company has been involved in a lengthy US lawsuit over fake advertising.
Both of these factors are behind the disappointment of Boohoo’s stock performance over the past year. The company is moving towards becoming more transparent and open, but it can take a considerable amount of time to repair a damaged reputation. This can discourage potential investors over the years to come.
Another concern I have about Boohoo’s stock price is worth.. Even after a sharp drop in the past few months, the price-earnings ratio is still very high at around 26. This seems expensive to me, even considering the good results.
To me, Boohoo’s stock doesn’t look that attractive. I think the company’s performance was strong, but many investors are concerned about the continued impact of the pandemic on the company. In addition to this, the stock price is not necessarily cheap because it is trading at 23 times the profit. Therefore, we have no plans to add Boohoo shares to our portfolio.
Now this “Scream and buy” Stocks are trading at a significant discount from the IPO price, but the sky seems to be the limit for the next few years.
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Dylan Hood does not have a position in any of the shares mentioned. Motley Fool UK recommended the boohoo group. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, given the various insights, A better investor than us.
Boohoo’s stock price soared on Friday! Should I buy it now?
https://www.fool.co.uk/2021/12/20/the-boohoo-share-price-shot-up-on-friday-should-i-buy-now/ Boohoo’s stock price soared on Friday! Should I buy it now?