American Invest Hub
  • Politics
  • Investing
  • Business
  • Latest News

American Invest Hub

  • Politics
  • Investing
  • Business
  • Latest News
Investing

Capri Holdings stock price is heading towards a 75% crash

by admin October 31, 2024
October 31, 2024
Capri Holdings stock price is heading towards a 75% crash

Capri Holdings (CPRI) stock price has suffered a harsh reversal and is on track for the third consecutive week of decline after its acquisition bid failed. It dropped to a low of $19.45, its lowest level since October 2020, and 73% below its highest level in 2023. 

Tapestry and Capri Holdings deal

The main reason why the Capri Holdings stock price has imploded is that the FTC won a legal challenge for its proposed merger with Tapestry, the parent company of Coach, Kate Spade, and Stuart Weitzman. 

In a filing, Capri said that it would file the court ruling to the Court of Appeals after a court gave a preliminary injunction to block the merger transaction. When blocking the merger, Judge Rochon said:

“The evidence reflects that Tapestry perceived the acquisition of Michael Kors to be an opportunity to decrease Michael Kors’s discounting and increase Michael Kors’s prices.”

I believe that the FTC has made a strong case for blocking the merger because it demonstrated that the two companies offer “affordable luxury” products to their customers. As such, a merger could create an American monopoly in that area.

However, the companies could demonstrate that the industry is much bigger and that it is dominated by European brands like LVMH and Burberry. 

My view is that Tapestry will ultimately give up on the bid and focus on building its business. Besides, the odds are significantly against the deal because of their impact on higher handbag prices. 

Read more: Capri stock soars 55% on a merger agreement with Tapestry

So, what next for Capri Holdings?

Therefore, assuming that the Capri Holdings and Tapestry fails, what will happen to the former? 

A look at Capri’s financials shows why it is very committed to the deal. Its annual revenues have been relatively volatile in the past few years. It brought in $5.5 billion in 2019, a figure that dropped to $4.06 billion in 2021. 

Capri’s revenue then rose to $5.61 billion in 2022 and dropped to $5.16 billion in the last financial year as consumer spending eased. 

Worse, its profits have also been moving in the wrong direction. It made a net profit of $822 million in 2021, followed by $616 million in 2022, and a net loss of $229 million in the last financial year. 

The most recent financial results showed that its revenue continued moving in the wrong direction. It dropped by 13% to $1.07 billion, which the management blamed on soft consumer spending.

In all fairness, other big players in the luxury space like Burberry, Kering, and LVMH have reported weak financial results recently, citing softening demand in China. However, Capri’s business seems to be doing much worse than other luxury brands.

Consequently, Capri’s gross profit fell to $689 million, while its loss from operations came in at $14 million, worse than the previous profit of $48 million.

All three brands are not doing well. Versace’s revenue fell by 15.4% to $219 million, while Jimmy Choo and Michael Kors fell by 5.5% and 14.2%, respectively.

The other big issue that Capri faces is that its balance sheet is not all that good. It ended the last quarter with over $461 million in short-term debt, $374 million in lease liabilities, $1.2 billion in long-term debt, and $1.3 billion in long-term lease liabilities. 

These substantially high liabilities are backed by $213 million in cash and equivalents and $902 million in inventories. 

Capri stock price analysis

Capri chart by TradingView

So, what next for the Capri Holdings share price? The weekly chart shows that the CPRI share price has been in a strong bearish trend in the past few months. It recently crossed below the key support at $29.30, its lowest point on August 12.

The stock has formed a death cross pattern as the 50-week and 200-week moving averages have crossed each other.

Capri has also invalidated the inverse head and shoulders pattern, a popular bullish sign. It has also moved below the key support at $37, its lowest point in May 2022. In most periods, a double-top pattern is one of the most bearish signs.

Therefore, the stock will likely continue falling as sellers target the key support at $5.50, its lowest point on March 16. This drop implies a 73% drop from the current level.

The post Capri Holdings stock price is heading towards a 75% crash appeared first on Invezz

0
FacebookTwitterGoogle +Pinterest
previous post
Airbus share price forecast: here’s why it’s ripe for take-off
next post
IEP stock: No good reason to invest in Icahn Enterprises

Related Posts

Barclays share price has stalled: will it rise...

April 2, 2025

Is Plug Power a good contrarian stock to...

December 6, 2024

LME Sanctions on Russian Metal Push Copper, Nickel...

April 17, 2024

Micron stock surges 16% on strong forward guidance:...

September 27, 2024

Rio Silver: Leveraging 25 Years of Mining Experience...

April 30, 2024

USD/TRY forecast: Will the Turkish lira hit 40...

February 20, 2025

Golden Deeps Expands Footprint in the World-Class Lachlan...

July 12, 2024

USD/TRY forecast: to rise to 40 amid Fed...

December 28, 2024

Prismo Metals ZTEM Survey Identifies Priority Drill Target...

February 10, 2024

Top 4 hotel stocks to buy as the...

January 25, 2025

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest News

    • GMS stock jumps 29% on takeover interest from Home Depot, QXO, analysts raise PTs

      June 22, 2025
    • Japan’s rice price surge: what’s driving it and why it could spark a political crisis

      June 22, 2025
    • BofA raises STOXX 600 target amid resilient global growth, warns on Mideast risks

      June 22, 2025
    • Palantir co-founder: US must prevent Iranian nukes

      June 22, 2025
    • Fed governor Waller advocates for July rate cut amid tariff, labor market outlook

      June 21, 2025

    Categories

    • Business (3,189)
    • Investing (2,528)
    • Latest News (2,000)
    • Politics (1,530)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: americaninvesthub.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 americaninvesthub.com | All Rights Reserved