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After falling 75%, Boohoo stock price is now too cheap to miss?

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It used to be a favorite growth of investors, but how things have changed Ugu (LSE: BOO) stock price. Over the past 12 months, Boohoo has dropped 75%. Part of that, 40%, came from early 2022.

Does this reversal make it one to avoid, or is it a shout out buy now?

Well, Boohoo has suffered from a number of problems. He faced problems with suppliers and, in some cases, employment practices. I think now the company is going beyond that. Moreover, it goes all year round results recently released, Boohoo is again greatly increasing its customer base.

And then there were global supply problems, exacerbated by rapid expansion. Although Boohoo’s retail business grew strongly, it had to rely more and more on an uncontrolled supply infrastructure.

Increase power

But Boohoo is also appealing to that. Over the past year, the firm has said it has increased its warehousing and distribution capacity and is now capable of servicing more than £ 4 billion in net sales.

How this will face the summer of global shocks and rapid inflation, we can not yet say. But it’s a concern.

Last year, the group’s total sales increased by 61% compared to 2019-20 (ended February). I think the comparison is better than in 2020-2021, when this year is full of pandemic anomalies.

Boohoo also believes it has significantly increased its share of two key markets – the UK and the US – from levels before the pandemic. Given this in figures, UK revenue grew by 27%.

What’s the problem?

With all this upbeat news, why is Boohoo’s stock price still stuck in a big drop? Recent results have a downside. Adjusted earnings before tax decreased by 24% compared to 2019-2020, and adjusted diluted earnings per share decreased by 25%.

What do I do with all this? It doesn’t surprise me that profits are falling after a year of supply problems suffering from various companies working with consumers. I admit that the retail prospects for next year scare me.

However, I can’t help but feel that finding market share is right for Boohoo in these circumstances, especially consolidating its core markets. Foreign economic conditions must be left to themselves.

Cash flows

But as long as we sit back and hope that the profit situation will recover, there is one ridiculous problem. That’s cash, and whether Boohoo is enough to keep revenue growth in order.

On that front, cash flow Last year it almost dried up. And the meager £ 1.3 million of net cash on the books makes me twitch a little. But the company has just agreed on a new revolving loan of £ 325 million, making things easier.

I think the biggest risk a Boohoo stock price faces, in addition to weaker returns, is sentiment. The market is firmly against stocks right now. And I’ve seen such things go on for years.

Overall, would I buy Boohoo stock? I already did, doubling earlier this year. But I am worried about the economic situation and I am not buying today. Boohoo is now for me holding.

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