Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

ASOS share price set to soar amid impressive earnings reports

The fast-fashion giant ASOS saw shares rally as markets opened this morning following strong earnings reports and a stable long-term outlook.

The fast-fashion giant ASOS has seen its share price rally as markets opened on Wednesday, immediately jumping 90 points to 3590 within the first few minutes of trading. The rally comes on the back of an unprecedented winning streak for the company, which has consistently been one of the best performers on the FTSE since the outbreak of the current economic crisis.

The British public's affinity for affordable, quickly-produced loungewear has certainly not waned during the course of the pandemic, as evidenced by the record sales figures that ASOS has reported in the months up to July. Let's take a closer look at the current ASOS share price rally, and see what the long-term prospects are for this young but immensely popular retail company.

A sweet summer for ASOS

Nobody could deny that things were going swimmingly for ASOS prior to the current economic climate. The company posted record annual revenues of over £2.5 billion in 2019, while also increasing its returns to shareholders by 84% in the same year.

However, the past few months have seen unprecedented success for ASOS, pushing its share price ever higher and its market cap to a lifetime high of £3.56 billion. ASOS recently released its July trading statement, which showed that they had increased revenues in the quarter leading up to July by 10%, equivalent to £1.04 billion.

This has helped to lift the ASOS share price further, to the extent that, if you had invested in ASOS shares back in February, you would now be seeing returns of around 220%. The success of ASOS this summer has not come as a surprise to many retail industry pundits.

The lockdown measures have spurred an unprecedented boom in online shopping, with providers of affordable and comfortable loungewear faring better than luxury retailers such as Burberry, which has seen its own share price decimated this summer.

ASOS share price long-term prospects remain rosy

Of course, there is every chance that the ASOS rally is now nearing its peak, but it is clear that long-term confidence in the company's success remains high. For one, ASOS has clearly benefitted from the decline of its scandal-hit competitor Boohoo, which has lost a raft of customers and clients amid revelations about working conditions in its factories.

ASOS, meanwhile, remains in a much stronger position. Retail analysts are expecting sales of female summer wear to skyrocket throughout the rest of July and August, as the UK consumers that make up 35% of ASOS customers return to the bars and beaches.

In addition, ASOS is outperforming competitors in overseas markets. Sales growth in EU and US markets is up by around 20% this year, as the company continues its aggressive push into overseas retail scenes.

The company has also remained reactive throughout recent events, being able to instantly offer different products the second that demand changes as a result of its flexible supply chain. These factors suggest that the ASOS share price rally is far from over.

How to trade stocks with IG

Looking to trade the ASOS and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs and spread bets in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘ASOS’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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