Stock of the day: Cettire

(AI video summary)

This video was created on 23 April for IG audiences by ausbiz.

ASX code: CTT

Cettire experiences market pressure amid trade tensions

Cettire, a global online retailer of personal luxury goods, has reported softness in the United States (US) market as trade tensions with China escalate. With the US representing Cettire's largest market and Chinese imports accounting for 3.8% of the retailer's total sales, the company faces significant exposure to ongoing trade disputes.

This market pressure has resulted in Cettire shares falling approximately 16%, closing at their lowest level since August 2022. The company has not provided additional guidance, instead emphasising its focus on achieving profitability in the current quarter.

For the third quarter (Q3), Cettire recorded a modest 1% increase in sales revenue, failing to impress investors.

Technical analysis reveals bearish trend

Technical analysis of Cettire's weekly chart reveals a concerning bearish trend. The stock is testing a key support level around $0.50, significantly down from its previous resistance level of $5 established in 2021.

With a relatively small market capitalisation of $200 million, Cettire is unlikely to attract institutional investors and remains primarily held by retail investors. The stock has lost approximately 90% of its value compared to a year ago, reflecting serious concerns about the company's direction.

Analyst recommendations and ongoing challenges

Analysts point to several challenges facing Cettire, including:

• Ongoing concerns about the company's calculation of shipping costs in the US
• The founder's decision to sell a substantial number of shares when prices exceeded $4
• Declining profit margins over recent years

Based on the technical outlook and fundamental concerns, analysts universally recommend selling the stock. The consensus view suggests investors should look for better opportunities elsewhere rather than attempting to counter the strong downward trend Cettire is experiencing.

Investment considerations and alternative opportunities

Given Cettire's current trajectory, investors holding the stock might consider exiting their positions given the combination of trade tensions, declining declining share prices, and internal challenges. With US earnings season underway, traders may find better opportunities in retail companies with stronger fundamentals and positive price momentum.