IWG share price analysis: where fundamentals meet technicals

IWG (LON: IWG) share price has sold off in the past few days as technology companies continue their layoffs. The stock was trading at 159.55p on Thursday, which was about 20% below the highest point this year, meaning it has moved to a bear market. It has dropped by ~66% from its highest level in January 2022.

IWG strong growth

IWG is one of the biggest flexible workspace companies in the world. It operates some of the best-known brands in the industry like Regus, Spaces, HQ, Signature, and The Clubhouse, among others. The company competes with the likes of WeWork and Hubble IQ among others.

IWG business is doing well, as evidenced by the strong financial results published earlier this month. The company’s revenue jumped by 23% to £3.1 billion as its footprint increased to 65 million sq ft. Most importantly, the company’s operating profit increased to £147 million. Its EBITDA jumped by 442% to £317 million.

Most importantly, the company managed to lower its loss as its earnings per share (EPS) narrowed from 26.2p to 11.3p. In his statement, Mark Dixon, the company’s CEO said: 

“During 2023 we will continue building on our capital-light growth strategy which allows us to capitalize on the growing pipeline of property investors seeking to maximize their returns by partnering with IWG. We continue to be well-placed to deliver further revenue, profitable growth and reducing leverage as more companies permanently embrace hybrid working.”

IWG is set to continue growing as WeWork, its biggest competitor continues struggling. We stock price has dropped by 30% in the past three months, bringing its total market cap to about $563 million, At its peak, WeWork was valued at over $45 billion. 

WeWork recently announced that it would convert $1 billion of Softbank’s debt into equity. This is seen as a way of the company buying time considering that its cash burn is continuing. Therefore, IWG will likely benefit as WeWork pulls back from some of its key markets. 

IWG share price forecast

IWG chart by TradingView

IWG’s fundamentals look good as the company’s growth continues and losses narrow. However, its technicals are painting a different picture. On the condensed daily chart, we see that the stock has been forming an inverted cup and handle pattern. In price action analysis, this pattern is usually a bearish sign. It is now in the process of forming the handle section of this pattern,

Therefore, while the fundamentals are doing well, the stock will likely have a bearish breakout in the coming months. This outlook will be confirmed if the shares move below the lower side of the C&H pattern at 116.90p.