Interactive Investor

Lookers: will we see some surprise recovery on relisting?

Our chartist gives his take on where things could go for Lookers when they re-enter the market.

26th November 2020 09:43

Alistair Strang from Trends and Targets

Our chartist gives his take on where things could go for Lookers when they re-enter the market.

Lookers PLC (LSE:LOOK) 

There's a saying that ‘the market always knows’, and visually there can be few shares where this isn't more evident than Lookers (LSE:LOOK)

Considering the company never declared less than £30 million profit before taxes since 2009, at the end of 2015 something started to go very wrong with its share price. 

And when it slipped below 106p back in 2017, the writing was pretty much on the wall for what was to come.

At the start of July this year, the company took the unusual step of suspending trading in their shares due to an audit discovering a £300,000+ fraud. 

Their results, finally revealed, show a loss of £46 million in 2019. 

Given the damage to the motor trade during Covid-19, we're not inclined to expect anything exciting for 2020 either.

So, surely the big question must relate to the share price? Generally we avoid discussing suspended shares like the plague, but in this instance we're a little curious as to the future when the shares are admitted to trading again. 

Should the price manoeuvre below 18p, reversal to an initial 10p is anticipated. 

If such a level breaks, we'd hope 4.35p shall provide an ultimate bottom, along with a suitable excuse for a proper bounce. 

Visually, there's even ample argument to hope for a bounce at 10p given this matches the all-time low in March of this year.

Closure below 4.35p would be a really bad thing. We're unable to calculate below this point.

Of course, we can easily return to our opening truism that ‘the market always knows’, as there's a (very slight) chance all this utterly dreadful news is priced in, with a result, when the share is relisted, that some surprise recovery becomes possible. 

We certainly shall not be impressed unless the price exceeds 35p and rejoins the historical uptrend. 

Such movement is liable to prove worthwhile, capable of triggering further recovery to 40p initially with secondary, if exceeded, at 52p. 

Beyond such a level, we'd need to stir the tea leaves again as the potentials currently look too good to be true.

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea. 

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