Back below 70p, is the Vodafone share price set to slide?

The Vodafone share price has been a disaster over one year, five years, and a decade. But after falling below 70p, are its shares too cheap or a value trap?

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April was a good month for the FTSE 100 and many of its constituents. The index rose by 2.6% over 30 days, comfortably beating several global counterparts. For example, the US S&P 500 lost 3.1% in a month. But the Vodafone Group (LSE: VOD) share price failed to join the party yet again.

Vodafone’s share slide

For long-suffering shareholders, the past 10 years have been a lost decade. The Vodafone share price has more than halved over 10 years, crashing by 51.2%. It’s a similar tale over five years with a plunge of 51.7%.

As I write, Vodafone shares trade at 67.66p, valuing this once-mighty telecoms group at £18.3bn. This is a mere fraction of its market value in its heyday, just before the dotcom bubble burst in 2000.

Furthermore, this Footsie share is down almost a tenth (-9.9%) over six months and 27.8% over a year. I’ve struggled to find any period ranging from one day to 10 years where this stock has displayed positive, upwards movement.

With such relentlessly negative momentum, it’s no wonder some investors regard Vodafone as a classic ‘value trap’.

We own this stock

As it happens, I’m something of a contrarian investor. Hence, my wife and I own shares in this business. For the record, we bought our stake in December 2022, paying 90.2p a share for our holding.

As things stand, we are sitting on a paper loss of a quarter of our initial investment in Vodafone. Though this is hardly an ideal trade, this loss does exclude dividends. And it’s largely for this income stream that we bought these shares in the first place.

Since we’ve owned this FTSE 100 stock, we have received two dividends of $0.045, totalling $0.09 (7.2p). This equates to around 8% of our investment, helping to offset some of our 25% loss.

What next?

Nearly four decades of investing has taught me not to make predictions about short-term price movements for stocks. All too often, I’ve ended up with egg on my face.

That said, we won’t sell our stock at anything near current prices. After all, the collapsing Vodafone share price has driven up its dividend yield to 11.4% a year — the highest in the FTSE 100.

Now for some bad news. This cash payout is being halved in 2025 to $0.045 a share. This will save the company £1bn a year, conserving cash and strengthening its balance sheet. With net debt standing at €36.2bn (£30.9bn), this isn’t actually a bad idea.

Then again, Vodafone is selling its Italian arm for €8bn and intends to use half this sum to buy back shares. At the current share price, this will shrink the share base by 21.9%, reducing cash outflows and boosting earnings per share.

In summary, I’m willing to back CEO Margherita Della Valle and her turnaround strategy for now. We bought these shares on a long-term view, so why give up after just 18 months? But if the facts change, then I could change my mind!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Cliff D’Arcy has an economic interest in Vodafone Group shares. The Motley Fool UK has recommended Vodafone Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

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