ZIM Integrated (NYSE: ZIM) stock price has been in a strong freefall as concerns about the shipping industry faces multiple headwinds. The stock plunged to a low of $7.82 this week, the lowest point since March 2021. It has dropped by more than 81% from the highest point on record.
Maersk warns on subdued demandZIM Integrated share price will be in the spotlight on Friday after Maersk warned about the shipping industry. In a statement, the company’s CEO warned that the shipping sector was going through the ‘new normal of subdued demand’ as the global economy slows.
The company also warned about overcapacity in the sector with no noticeable uptick in recycling or idling. As a result, the company’s financials continued dwindling, leading to a sharp decline in revenue and profits.
Its revenue crashed by $10.6 billion to $13 billion. Its key divisions like ocean, logistics & services, terminals, and towage and maritime suffered a major drop in revenue. As a result, Maersk’s EBITA dropped by $9 billion to $1.9 billion. Maersk also decided to slash 10,000 workers to deal with this new normal.
Therefore, there is a likelihood that ZIM Integrated’s business will be under pressure for a while too. Maersk, the biggest company in the industry, is often seen as a barometer of the broader sector.
The most recent results showed that ZIM’s revenue crashed by 61.8% YoY to $1.3 billion. Its average rate dropped to $1,193, a 67% YoY crash. That price was lower than the six-month average.
Therefore, with ZIM Integrated, we have a company that is burning cash and one that is going through a deep slowdown. Its debt burden is also increasing as it jumped by over $500 million in Q2. As a result, holders will have to go for a while without receiving any dividend payouts.
Watch here: https://www.youtube.com/embed/e6gZuEF3N8s?feature=oembedZIM Integrated stock price forecast
ZIM and other shipping stocks have been in a deep downward trend in the past few months. The stock slipped below the crucial support at $11.75, the lowest swing in December last year and June 27th.
ZIM has crashed below the 100-day and 50-day Weighted Moving Averages (WMA), signaling that bears are in control. The Relative Strength Index (RSI) and the Stochastic Oscillator have pointed upwards.
Therefore, the outlook for the stock is still bearish as business conditions worsen. This could see it drop to the next key support at $5.
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