Could Man Utd shares jump 15% this week?

As Manchester United shares reflect the hunt for Champions League football, the release of earnings and speculation over a certain ‘special one’ arriving at Old Trafford, the club is arguably just as interesting off the pitch as on.

Source: Bloomberg

Manchester United is set to release its latest earnings on Friday 13 May, tying in perfectly with a week-long period which will arguably do just as much to provide investors with an idea of the firm's fortunes going forward. The club has been improving markedly from a financial point of view in recent years, with debt gradually being eroded (-7.3% in last quarter) as revenues increase.

This is likely to improve significantly with the introduction of a new record-breaking domestic 2017-19 TV deal which will see league revenues rise over 70%. From a sponsorship view, the firm is in rude health, given the record breaking Adidas sponsorship (£750m over ten years), coupled with a seven-year deal with General Motors.

There is no doubt the club is going from strength to strength on a financial front, which has brought about significant upside from a stock valuation point of view. However, the team itself will have to chip in to help carry the financial side once more in the coming week.

Manchester City’s inability to beat Arsenal over the weekend has provided Manchester United with an opportunity to take fourth spot, and a Champions League place. Two wins in their remaining games (West Ham and Bournemouth) will secure entry into the lucrative competition once more. Not only would this provide increased direct revenue, but it would also raise the clubs profile once more with the global fan base.

Looking at the share price, there has been a sharp appreciation since United beat their archrivals, Manchester City. This brought about a distinct possibility that Champions League football could be attainable.

As such, given the uncertain nature of qualification, we could see significant volatility this week, with the season being wrapped up at the same time as the earnings release. Price action has formed a flag formation on the daily timeframe, which points towards the possibility of another major leg higher towards the $19.00 resistance area.

The weekly chart indicates that the $19.00-$19.91 zone has largely capped any rallies in the past three years. Thus barring anything spectacular, a rally into this zone is likely to be sold into. However, be aware that there could be such a monumental event around the corner, with many expecting ex-Chelsea manager Jose Mourinho to take the reins in the summer.

Widely heralded as one of the most successful managers to have graced the Premier League, there is a feeling that he would provide the club with the trophies (if not style) they desire. With trophies comes greater sales, improved commercial deals and prize money. As such, this chart could be one of the most interesting to watch over the coming weeks and months, as the hunt for Champions League football straddles the earnings release, playing out against a backdrop of the potentially game changing managerial appointment in the summer.

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