WPP (LON: WPP) share price retreated sharply on Monday after the relatively weak financial results by Martin Sorrel’s S4 Capital. The shares retreated by over 2% and retested the support at 807p. In all, the stock has plunged by more than 22% from its highest point this year.
Martin Sorrel’s S4 weak guidance
Shares of WPP, the biggest advertising agency in the world, retreated after the latest earnings by S4. In a statement, S4 Capital said that its forward revenue and margin growth were under pressure.
The company cited this performance to the ongoing cost cuts by some of the biggest companies in the world. Many firms, including well-known brands like Microsoft and Meta have slashed their workers this year.
These companies are struggling as interest rates rise and inflation remains sticky. Also, S4 Capital cited the growing use of artificial intelligence by companies in marketing. S4 Capital is not alone. Other companies like Omnicom and Interpublic announced weak results.
Therefore, analysts believe that WPP will also publish weak results on August 4th. In the most recent results, WPP said that its revenue in the first quarter rose by 4.9% to 3.46 billion. It won several companies like Ford, Mondelez, and Maruti Suzuki during the quarter.
WPP’s business has been growing at a slower pace of the years as most companies focus on social media marketing. Its annual revenue peaked at over 14.89 billion pounds in 2016 and dropped to 12 billion during the pandemic. It rose to 14.3 billion pounds in 2022 and the company expects modest growth this year.
WPP share price forecast
The daily chart shows that the WPP stock price peaked at 1,052.5p in February this year. It has now pulled back by more than 23% from its highest point this year, meaning it is now in a bear market.
The stock has plunged below the 25-day and 50-day moving averages and is hovering near the lowest level since December 30th. It has also moved below the 38.2% Fibonacci Retracement level.
Therefore, there is a likelihood that the WPP stock price will continue slipping as sellers target the next key support at 767p, the lowest point on December 20th.
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Read More: WPP share price sinks to a bear market as advertising outlook cools