Dixons Carphone - The chart says it all!

Thursday, 24th August 2017 13:30 - by Rajan Dhall

So I have been insisting the impact that FX could have on companies since brexit, and now the falling GBP has its first major victim. Dixons Carphone this morning issued a warning and shares fell more than 30%, with the Co. saying profits this year would be £360m to £440m, down from £501m last year.

On the chart we can see shares stalled at the value area but we could see a further drop during illiquid summer trade. I have highlighted some areas that could act as support and he 126.37 is the most likely in my opinion over a longer term horizon. 

CEO Seb James stated mobile phone sales had become "more challenging" in recent months. and the fall in the pound had made handsets more expensive and innovation of phones has been "incremental". Mr James  then stated that he was shocked at the size of the share price drop "Thoughtful investors will begin to see quite soon that we look a bargain and the shares should recover," he said. What do you think wishful thinking? 

If we discount what he is saying and the events of today, a 20% drop would have sufficed but we need to see how the cost cutting measures work out and if the weak pound will continue to impact the company.