ITV (LON: ITV) share price has been among the best-performing FTSE 250 companies in 2023. The vulnerable stock jumped to a year-to-date high of 97p on February 9, which was ~82% above the lowest point in 2022. It has lost the bullish steam and pulled back to 87p.
Ads and subscription challenges remain
ITV stock bounced back as investors bought the company’s dip after it crashed to a multi-year low of 52.95p. Most of these gains happened after the firm published strong financial results in December. Its external revenue jumped by 6% to £2.5 billion while non-advertising revenue jumped by 13% to over £1.6 billion. As I wrote here, its ad revenue is not doing well.
The company is betting big on streaming. It launched ITVX, an ad-supported streaming service that is home to some of the biggest shows in 2023, including A Spy Among Friends and a Year on Planet Earth. It has a library of over 250 titles, which makes it highly valuable as larger companies seek to grow their businesses.
ITVX faces significant competition from other well-known and well-funded companies like Netflix, Disney+, and HBO Max among others. At the same time, its ad-supported television station is facing competition from companies like TikTok and YouTube. In other words, ITV is operating in a business that is going through a long period of secular stagnation.
ITV is a highly popular company and its stock is significantly cheap with a trailing price-to-earnings ratio of about 7.50. However, it is a bit hard to recommend it as a good investment considering that its revenue growth is expected to be a bit slow.
Also, it is still early days to determine whether the company’s ITVX will be successful or not. That’s because of the competitive nature of the industry. Some of the top players in the industry are platforms like YouTube, Netflix, BBC Iplayer, Sky, and Disney+ among others.
ITV share price forecast
ITV stock chart by TradingView
ITV stock made a strong recovery after plunging to a low of 54p in September. This recovery saw the shares jump above the important resistance point at 80p, the highest level on November 14. The shares have moved above the 50-day and 200-day moving averages. It has also moved to the 50% Fibonacci Retracement level.
Meanwhile, the stock has moved to the third phase of the Elliot Wave pattern. Therefore, a pullback to about 80p will likely happen before it resumes the bullish trend.
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