that Zalando-Stock (WKN: ZAL111 ) has hit a new low in its negative run. Meanwhile, the shares are listed just below the 20 euro mark. If we take a comparative look at the record high above 105 euros, the minus is now over 80%. A hard fall and a deep belly landing.
Meanwhile, many foolish investors should also be wondering where Zalando stock will stop falling. Is it maybe 15 euros? Or deeper? A lot seems possible in the current, highly volatile market phase. In particular, growth stocks that are barely or not profitable at all are penalized. But let’s look at what such a case would mean.
Zalando share: under 20 euros, soon 15 euros?
Ultimately, the market valuation of Zalando stock is already very, very low. With a share price of EUR 19.55, the market value is just EUR 5.1 billion. If we theoretically assumed that the case would continue and that we would only reach a low of 15 euros, it would not only mean a loss of almost a fifth that we would have in front of our noses. No, but also a market value of less than 4 billion euros.
Let’s put it into a larger context. Zalando had a turnover of 10.4 billion euros in 2021. Therefore, the ratio between price and sales is already below 0.5. Another sell-off gave us a price-to-sales ratio of just 0.4. That would really be a deep value level where the rather tight profitable base could take revenge in the near term.
Nevertheless, we should not forget that Zalando achieved an earnings per share of EUR 0.91 in 2021. If we even reach this low value, the price-earnings ratio would not even be 16.5 if we only found the bottom of EUR 15. For an e-commerce player with a net margin of around 2%, that would still be very, very cheap to me.
That much should (perhaps) not come anymore
Ultimately, there are different perspectives on Zalando stock. Another case is possible. But as foolish investors we should consider what the more likely scenario is in the medium term. In fact, those responsible in management still expect a gross merchandise volume of 30 billion euros in 2025 and a turnover of around 20 billion euros. The valuation can therefore even become significantly cheaper.
Whether a deeper fall than now is therefore likely? It is best to answer the question yourself. Up until now, the share certificates have always been able to fall further. But at some point a bottom is likely, for me even sooner than further away.
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Vincent owns shares in Zalando. The Motley Fool owns shares in and recommends Zalando.