PayPoint share price pattern points to a steeper crash to 250p

PayPoint share price suffered a big reversal after forming a triple-top pattern on the weekly chart and after publishing relatively weak financial results. PAY plunged by over 20% in its worst day in years. It moved to a low of 512p, its lowest point since June last year.

PayPoint share price crashed after forming a triple top pattern 

The weekly chart shows that the PayPoint stock price formed a triple-top pattern at 767p and a neckline at 520p. This pattern is characterized by three peaks and a neckline, and is one of the most common bearish reversal patterns in technical analysis.

The stock has now moved below the neckline at 520p, confirming this pattern. Also, it has moved below the 50% Fibonacci Retracement level at 542p. It has also moved below the 50-week and 100-week Exponential Moving Averages (EMA).

Other technicals points to more downside. For example, the Awesome Oscillator has fallen and is nearing the zero line. Also, the stock has moved below the Ichimoku cloud and the Supertrend indicators.

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The price target in a triple-top pattern is estimated by first measuring the distance from the upper side and the neckline and the same distance from the neckline. In this case, the target for the stock is 245p. For that to happen, the stock will need to move below the key support at 295p, the lowest level in May 2023.

However, this PayPoint stock price is based on the weekly chart, meaning that it may take a long time before it crashes to the target price. On the flip side, a move above the resistance level at 600p, the 38.2% Fibonacci Retracement level, will invalidate the bearish outlook and point to more upside.

PAY stock price crashed after earnings 

The main catalyst for the PayPoint stock price crash was its financial results, which came out on Thursday.

These numbers showed that the underlying EBITDA dropped to £37.3 million in the first half of the year from £37.5 million in the same period last year.

The underlying profit before tax dropped by 4.5% to £25.7 million. On the positive side, the company’s revenue jumped by 6.7% to £144.1 million. 

PayPoint stock also dropped after the management warned that its goal of delivering an EBITDA of £100 million will take longer to do so, pointing to the distribution of its parcel business and the slowdown of the monetization of obsconnect. The CEO said:

“While obconnect continues to build its new business pipeline and range of opportunities, the pace of growth and monetising of these opportunities in year is slower than we had planned.”

On the positive side, the company announced shareholder returns of about £90 million in the form of buybacks and dividends. It also reduced its net debt to £84 million from £86 million last year. 

The management also hopes to keep growing its revenue by between 5% and 8% annually in the next few years. It also hopes to reduce its costs over time and continue to slash its outstanding shares.

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