ITV shares tumble as M&A picture goes fuzzy
Ken Odeluga August 7, 2015 5:29 PM
<p>ITV shares were in focus on Friday as its rivals in Europe fell sharply. Stock of the largest UK free-to-air broadcaster slid to the bottom […]</p>
ITV shares were in focus on Friday as its rivals in Europe fell sharply.
Stock of the largest UK free-to-air broadcaster slid to the bottom of the FTSE 100 index in line with German and French peers.
This came after the US film and TV giant Walt Disney unexpectedly warned about the impact of so-called “cord cutting” on subscribers to its ESPN sports network.
Disney shares are down almost 10% this week after its chairman and CEO Jeff Iger admitted to “modest losses” during a conference call with analysts and investors.
Bearish option trades on shares of rivals Viacom, Time Warner, CBS Corp, Cablevision Systems and Comcast reflect the same concerns.
All this made ITV stock the worst performer on FTSE’S E300 Index of European stocks on Friday, leaving it on track for its largest one-day drop in nearly 15 months.
ITV was already subject to bearish waves after its long-time suspected suitor and avid acquirer of its shares Liberty Global said it did not intend to make an offer despite raising its stake to 9.9%.
In Germany, satellite broadcaster Prosiebensat 1 Media was the second largest loser among European media stocks, down as much as 4.5%, whilst France’s Numericable SFR cable TV group was third, losing 2%.
Both ITV and Prosieben shares traded half of their average daily volume within the first two hours of Friday’s session.
Since ITV stock marked several new all-time highs during the last year linked to speculation of an eventual take-out by Liberty, its downside might now be considerable.
ITV stock is still 60% higher than its price on 16th October 2014, the lowest of that year, even after losing 9% in the last 5 sessions.
Friday’s fall also pushed the shares through their 100-day moving average (light blue) and they are now sitting close to resistance/support spanning from the day’s 257p low back to 255p in April.
The stock has also broken the uptrend in place since March.
Friday’s low coincides precisely with a major Fibonacci retracement of the rise from March to ITV’s latest all-time high at the end of July.
This may aid support.
However, the descent from that level has been sharp, as noted above, and since the Slow Stochastic indicator provides a neutral input (neither overbought nor oversold) the chances for the stock look largely balanced.
This makes ITV Plc. shares more dependent on further news, whether that muddies the water about Liberty Global’s intentions, or clarifies them further.
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