WPP falls 19% this morning

Thursday, 25th October 2018 09:50 - by Rajan Dhall

I don't often write my blogs in hindsight but I have made an exception today as WPP are definitely grabbing my attention. WPP chief executive Mark Read has warned of "deteriorating" revenues with a 1.5% drop in the third quarter and stated, "We have been too slow to adapt.". Since the exit of Sorrell since Reid has expressed his dismay at the state of WPP and believes the turnaround may need some radical action.

First of all the Co. plans to sell its Kantar division and it is said that third-quarter reported revenue fell by 0.8% to £3.758bn, impacted by currency headwinds of around 2.0%. The group also dropped their FY guidance and said that the long-serving finance director Paul Richardson is to step down after 22 years.

Looking at the weekly chart below prices are breaking trends and levels all the time. Having said that the 845p level pointed out on the chart is strong. Below that 600p and 786p could provide some support. We are clearly in oversold territory but with sentiment this bad its hard to say where investors will find value. Coupled with such bad news and macro sentiment falling be careful when coming back into this company, the phrase catching a falling knife comes to mind. I would look for a clean break to the upside to confirm a change in sentiment before buying back in.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.