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BT Group share price struggles as Blackrock shorts its stock

By: Invezz
Image for BT Group to sell Openreach

BT Group (LON: BT.A) share price has gone nowhere this year even as the FTSE 100 index has pumped to its all-time high. The stock was trading at 108.95p on Tuesday, where it has been stuck at since February. It has plummeted by almost 40% from its highest swing in 2021, as I predicted.

Blackrock is short BT Group

Blackrock, the biggest asset manager in the world, has made a killing as the BT Group’s share price has plummeted. It has emerged as one of the biggest short-sellers in the stock as it bets that the stock’s sell-off will continue.

According to the FT, investors have shorted stock worth over £300 million, or 3.3% of all outstanding shares. This makes it the sixth most shorted company in London after Ocado, Kingfisher, Burberry, Sainsbury, and Rightmove. 

In addition to Blackrock, the other prominent companies that have shorted BT Group are the Canada Pension Plan Investment Board, AKO Capital, and Kintbury.

This trend happened as the company’s profitability and revenue growth deteriorated and capital investments rose. BT Group is now spending £15 billion to boost its Openreach fibre network in the UK.

The most recent results showed that the company’s revenue rose from £15.34 billion in the first nine months of 2022 to over £15.75 billion. Its adjusted EBITDA moved from £5.9 billion to £6.12 billion.

The company has other issues, especially in its business solutions business. Its adjusted EBITDA crashed by 13% to £1.2 billion, continuing a prolonged slowdown. This business, which emerged from the merger of its enterprise and global units in 2022, has not lived up to its expectations. Some analysts believe that BT Group should spin the business off.

BT Group has also faced significant competition in the UK, with companies like Vodafone and Three has intensified. The latter two have announced plans to merge their operations.

The next important catalyst for the BT share price will be the company’s earnings set for Thursday. Analysts expect the results to show that its total revenue rose by just 2.1% YoY to £20.86 billion while its adjusted EBITDA will be about £8.1 billion. 

BT Group share price forecastBT Group

BT chart by TradingView

Turning to the daily chart, we see that the BT stock price has moved sideways in the past few months. It has found strong support at 101.55p, where it failed to move below this year and in 2022. That is a sign that traders are scared of shorting the stock below that price.

Recently, it has jumped above the crucial resistance point at 107.30p, its lowest swing in October last year. It has also moved above the 50-day moving average. Therefore, the stock’s outlook is neutral ahead of earnings.

A break above the small descending trendline that connects the highest swings since March 2024 will point to more upside as bulls target the key resistance at 119.75p, the highest point on September 23rd.

The alternative scenario is where it makes a bearish breakout, a move that will be confirmed if it crashes below the support at 101.55p.

The post BT Group share price struggles as Blackrock shorts its stock appeared first on Invezz

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