Shares in UK pubs operator JD Wetherspoon [LON:JDW] continue to slump this quarter, setting up an attractive short side opportunity for traders which may have much more to give. Stock has dropped from 805p to 559p over the last 12 months.
The shares had been trading in a range of around 582-625 pence since early November but the market seems to be starting to make up its mind now that they need to be substantially lower. We saw another leg down for JD Wetherspoon last week and the stock is now down over 6% in the last 30 days.
What is sinking the JD Wetherspoon share price?
The big driver here is the latest set of results. The poor numbers coming from the wider UK economy are not helping things. JD Wetherspoon management has said that the latest set of taxes introduced by the UK government are hitting it hard - labour rates and National Insurance contributions will add around £60m to its costs per annum.
JD Wetherspoon has traded on the basis of low cost food and drink at a time when most British pubs are selling a pint of beer at over £7. I paid for my first £8 IPA in London this month. But this means that JD Wetherspoon margins will be tight and the government does not seem to be in a rush to help the hospitality sector.
Want the full story? Start a free trial of The Armchair Trader Plus+ today.
Get weekly investment ideas and tips that will take your investing to the next level. Sign up here.
Free 28 day trial. Cancel anytime.
Log In or Sign Up to Armchair Trader+Already a member? Log in here:
Not a member? Sign up now or see the membership benefits
Further content of this article is not available as it is for members only. Please visit the registration page for Armchair Trader Plus+ for further details on the benefits of becoming a member.
