Domino’s Pizza Inc. (NYSE:DPZ) this week continued with a crashing trend that has bedeviled the company in the last few weeks. Apart from the impact of the general market decline and the war in Ukraine, Domino’s faces more challenges.
Domino’s continues to report rising costs as it gets battered by the rising rates of inflation. The rising costs saw the company report a decline in profitability. However, it is not just costs that are driving the profits and share price down.
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Being in a price-sensitive industry means that Dominos cannot just raise prices in response. Such action results in reduced revenues and customers shift to the competition. Besides, customers are already running away, aware of discretionary spending. Domino’s has had to keep some of the customers through weekly offers on pizza to keep the revenues stable.
Domino’s tests prices below $400
The share price tested prices below $400 this week after an intra-week low of $390.34. Short-term moving averages point to a declining trend on the share price. Having breached the key price level of $400, the next support that the share price is likely to test would be the $360 support.
A decline to $360 will occur if a deal is not reached between the allies of Ukraine and Russia. A resistance level of $450 may be considered if the warring parties sit at the negotiating table and the hostilities cease.
Summary
Domino’s faces pressure from rising costs and stagnating revenues as inflation rises. The share price broke below $400 in the week. The crisis in Ukraine will determine the direction the stock takes.
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Source: https://invezz.com/news/2022/02/26/dominos-pizza-faces-downward-pressure-from-rising-costs-and-stagnating-revenues/