Thursday, October 1, 2020 10:03 AM EDT
Bayer (BAYRY) shares plummeted by about 10% on the Frankfurt Stock Exchange after the German chemical and pharmaceutical company announced a plan to cut expenses of more than 1.5 billion euros after reporting a profit warning for not meeting cash flow and sales targets for 2020 and 2021.
The company explained that the new cuts are intended to offset the impact of the coronavirus pandemic and the drop in demand for agricultural products, a market in which it intended to expand with the purchase of Monsanto two years ago. In this sense, Bayer will face provisions in its agricultural business of up to 10 billion euros.
The German giant bought Monsanto in 2018, a company that has not stopped suffering setbacks as it has been the subject of tens of thousands of lawsuits in the US for the use of glyphosate in Roundup herbicides, as it supposedly causes cancer.
Bayer's performance on the stock market has been uneven in the last five years:
- 2016, -14.40%
- 2017, +4.92%
- 2018, -40.83%
- 2019, +20.23%
Between January and October 2020, it has lost 34% of its value.
Source: Admiral Markets MetaTrader 5. Bayer CFD Daily Chart. Data range: from August 28, 2019, to October 1, 2020. Prepared on October 1, 2020, at 11 a.m. Keep in mind that past returns do not guarantee future returns.
In the chart above we can clearly see the fall of Bayer shares in the last candle. The price is dangerously close to the 46 euro support. If it breaks it, it would drop to levels not seen since 2011.
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