After crashing almost 90% is the boohoo share price suddenly about to skyrocket?

The boohoo share price has taken an absolute battering for some time but Harvey Jones reckons it might just be on the brink of an unlikely turnaround.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

It’s a sign of just how far the boohoo share price (LSE: BOO) has fallen that many will welcome the prospect of controversial dealmaker Mike Ashley seizing control of the ailing retailer.

When I looked at the stock on 16 September, I was horrified. The optics of boohoo heir Umar Kamani throwing a four-day celebrity-packed £20m wedding on the Côte d’Azur in May, then axing 1,000 staff days later weren’t great. Things didn’t get better.

The board was planning to hand £1m each in bonuses to CEO John Lyttle and co-founders Mahmud Kamani and Carol Kane, as a reward for performance. A crashing share price, plunging sales, shrinking cash flows and rocketing debt? Thankfully, shareholders blocked the payouts.

Should you invest £1,000 in Boohoo Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Boohoo Group made the list?

See the 6 stocks

Investors must be crying their eyes out

I was appalled by the hash boohoo made of its first US distribution centre in Elizabethtown, Pennsylvania. Hailed, as a ”complete game-changer” when it opened last year, it shut in September with a write-down of £80m.

boohoo has been knocked by wider events too, as high street reopenings and competition from budget rivals like China’s Shein hammered the fast fashion sector.

Enter Ashley as a white knight! Who writes this stuff? Still, he’s worked wonders for the Frasers Group share price, which is up 155.15% over five years. Over the same period, boohoo’s down a dizzying 88.9%.

To be fair, there’s little to separate the stocks over the last 12 months, with Frasers up just 0.32% and boohoo down 0.4%.

Created with Highcharts 11.4.3Boohoo Group Plc + Frasers Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Events are speeding up. On 18 October, boohoo announced a 15% drop in half-year sales to £620m and Lyttle’s departure. Yet the board still claimed boohoo is “fundamentally undervalued”, and is considering breaking up the business. 

I’m actually backing Frasers Group

Frasers has built up a 27% stake but still doesn’t have a position on the board. It slammed boohoo for everything from an “abysmal trading performance” to its “wholly unsatisfactory” £222m debt refinancing.

I won’t go into further details of this corporate slugfest. Instead, I’ll ask why any investor would want to get involved.

To be fair, boohoo still boasts a string of top brands, including PrettyLittleThing, Debenhams, Karen Millen, Coast, Dorothy Perkins and Warehouse. It has a low price-to-revenue ratio of 0.3, which means investors are paying just 30p for every £1 of sales. As interest rates fall shoppers could feel a bit more flush, and spruce up their wardrobes.

However, boohoo made a pre-tax loss of £75.6m in 2023 and £159.9m in 2024, and isn’t expected to deliver a profit until 2027 at the earliest.

I won’t invest with today’s boohoo board still in place. My only hope is that Ashley will muscle his way in and deploy some of his dubious magic. If he can unleash some value, the shares could suddenly fly.

That’s a binary bet and I won’t buy boohoo. Instead, I’ll cheer Ashley on from the sidelines. Now that’s something I never thought I’d say.

AI Revolution Awaits: Uncover Top Stock Picks for Massive Potential Gains!

Buckle up because we're about to dive headfirst into the electrifying world of AI.

Imagine this: you make a single savvy investment in some cutting-edge technology, then kick back and watch as it revolutionises entire industries and potentially even lines your pockets.

If the mere thought of riding this AI wave excites you and the prospect of massive potential returns gets your pulse racing, then you’ve got to check out this Motley Fool Share Advisor report – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And here’s the kicker – we’re giving you an exclusive peek at ONE of these top AI stock picks, absolutely free! How’s that for a bit of brilliance?

Get your free AI stock pick

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.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

Investing Articles

1 beaten down dividend stock investors could consider for passive income

Our writer Ken Hall takes a look at one under-pressure mining giant that should be on investors' radars as a…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

3 FTSE 100 investment trusts to consider for a new ISA in 2025

It's a new tax year and time to dust off that old ISA. Here are three FTSE 100 investment trusts…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Is there still time to pick up Nvidia stock cheaply?

The Nvidia stock price has just had a scary week. But here's why I expect that should have very little…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

Investors considering Legal & General shares could aim for £10,075 a year in passive income from a £5,500 stake!

Legal & General shares deliver one of the highest yields of any major FTSE-listed firm, so investing now could generate…

Read more »

Investing Articles

Is it game over for Rolls-Royce shares after the biggest single-week fall since Covid?

In the first week of April, the Rolls-Royce share price suffered its largest single-week drop since Covid. Our writer ponders…

Read more »

Investing Articles

Here’s why the IAG share price could rally to 300p again soon!

The IAG share price has been decimated in recent weeks with airline stocks caught up in the broader volatility. However,…

Read more »

Investing Articles

Here’s how to produce a £1,400 second income from a £20k ISA in the next year

Harvey Jones says it's possible to generate a second income of £1,400 from this year's Stocks and Shares ISA. It…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

The BP share price keeps falling. But should I put the energy giant in my SIPP?

Our writer looks at the recent BP share price performance and considers whether it would be a good addition to…

Read more »