Vodafone Share Price Forecast August 2021 – Time to Buy VOD?

Shares of British multinational telecommunications company Vodafone (LSE: VOD) are in the green today, currently trading at 118.20p as of August 06 10:54 UTC+1. The shares have experienced quite a rollercoaster ride for the past 18 months, which have got many investors intrigued about them.

Vodafone – Technical Analysis

Vodafone’s financial statement reveals a market cap of £32.60 billion with a total asset valuation of £132.091 billion. Its income statement reveals revenue of £39.09 billion with a profit margin of 0.26% for 2020. The debt to assets percentage for Vodafone is currently at 62.71%.

Oscillators for Vodafone such as Stochastic RSI Fast (3, 3, 14, 14)(95.90), Williams Percent Range (14)(−35.76), Bull Bear Power(0.89) and Ultimate Oscillator (7, 14, 28)(56.29) are pointing towards neutral. Moving averages such as Exponential Moving Average (100)(124.63), Simple Moving Average (100)(128.43), Exponential Moving Average (200)(125.89) and Simple Moving Average (200)(126.54) point towards selling.

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Recent Developments

Vodafone shares initially crashed back in March 2020 before reversing course and recovering. This upward move was finally reversed in April 2021, reaching roughly the same level today as it did 12 months ago. Despite volatility concerns, however, VOD shares might be on the verge of exploding beyond the pre-pandemic levels of the company.

Vodafone released its earnings report for the latest period last week which showed revenue growth of 5.7%, which has met most investor’s expectations. The share price received a slight boost after the release. There are signs that Vodafone is in the process of transforming itself into a Fintech stock. It launched M-Pesa ten years ago which enables money transfer between two non-smartphones.

The concept was one of the main catalysts behind the transformation of many African countries, most notably, Kenya. It has now amassed about 49.7 million users across the African nations it is deployed in, earning a total of €4.5 billion in the last three months. The growth isn’t stopping anytime soon as the company has decided to expand into South Africa and Ethiopia.

Vodafone partnered with technology company Unisys to develop a concept called Vodafone Digital Factor aimed at offering specialised digital tools for companies. According to Unisys, the partnership will help corporate clients of Vodafone to tap into technologies such as virtual and augmented reality, artificial intelligence and blockchain.

Should You Buy VOD Shares?

As exciting as VOD shares might seem, investors have to consider a few risks. For instance, M-Pesa represents only 20% of the overall revenue stream of Vodafone. Its status as a telecommunication company has been struggling in the last few years. Buildings and operating its infrastructure has led Vodafone to amass a total debt of €67.7 billion, which is double the company’s market cap. Interest payments have also been eating up a large portion of the company’s profits. Shareholders have lost 24% over 3 years at Vodafone. They have suffered poor share price returns and an overall poor business performance which would make them less likely to go for a CEO pay raise.

Additionally, rising inflation in the economy can lead to an increase in interest rates which can adversely affect Vodafone’s bottom line. M-Pesa does look like it has the potential to send its share price surging over the long term, but this isn’t certain. Funding future expansion may prove difficult considering the pile of debt that  Vodafone has to deal with. Thus investors should keep the shares on their watchlist and wait until the management can do something about the company’s solvency.

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