Business
Zalando plummeting: Stock reaches record low, despite Bank of America's abandoned buy recommendation.
Zalando shares reached a record low on Wednesday - the downward trend continues unabated.
The downward trend of the Zalando share continues: The recent downgrade by a renowned analyst and the forecast of challenging times for the fashion industry are weighing on the online retailer's stock price. On Wednesday, the stock price fell below the 17 Euro mark for the first time since its initial public offering in 2014, closing at 16.32 Euro - a decrease of 5.09 percent compared to the previous day.
Bank of America (Bofa) withdrew the buy recommendation for Zalando stocks after approximately one year and now advises to sell. Analyst Geoffroy de Mendez justified the downgrade with the increasing competition from brand websites and Chinese retailers such as Shein and Temu. He sees few opportunities for double-digit growth and expects further challenges for the fashion retail industry in 2024. Overall, the expert downgraded five industry stocks.
Thus, the Zalando shares are once again at the bottom of the list within the DAX with a discount of 23.5 percent. They already finished in last place last year with a loss of 35 percent.
Since reaching its record high in 2021, when the online fashion industry experienced a boom due to the COVID-19 pandemic, the stock has already lost 84 percent of its value. At that time, over 100 euros were temporarily paid for a single share.
The Issue Price for Zalando's IPO in 2014 was 21.50 euros. Since then, shareholders from the beginning have already lost more than one-fifth of their investment. The forecast for the stock price currently looks bleak, but experts believe there is at least a slight potential for recovery.
Zalando remains an important player in online fashion retail despite all challenges. However, it is becoming increasingly clear that competition in the industry is growing stronger and the potential for growth may be reduced.
Shareholders should therefore remain alert and keep an eye on the developments surrounding Zalando in order to take advantage of possible opportunities and minimize risks. Even record lows can sometimes turn out to be an opportunity for smart investments.
