Manchester United Shares Down 13% Today – Time to Buy MANU Shares?

Manchester United shares are declining nearly 13% in pre-market action this morning in New York after the company announced that two members of the Glazer family – the soccer club’s owners – are selling 9.5 million Class A shares.

This represents a total of 5.8% of the company’s weighted average number of ordinary shares outstanding as reported in the latest quarterly earnings release. The two sellers are Kevin and Edward S. Glazer. Upon completing the sale, their voting power in the club will be reduced to 13.78% and 13% respectively, down from a previous 17.5% and 16.3% according to the prospectus filed with the US Securities and Exchange Commission (SEC).

The proceeds of the sale will go to the selling shareholders, not the club. This would be another important divestiture from the Glazer family this year following the sale of another 5 million Class A shares from Avram Glazer back in March.

Could today’s downtick result in a full-blown reversal of the recent uptrend that Manchester United shares experienced? In the following article, I’ll dig deeper into the price action and fundamentals of the soccer club to possibly answer that question.

67% of all retail investor accounts lose money when trading CFDs with this provider.

Manchester United Shares – Technical Analysis

The price of Manchester United shares has been steadily rising since its July 2021 double-bottom at around $14.5 per share. This uptrend was primarily fueled by two important events. First, the club rehired Cristiano Ronaldo, the former Real Madrid and Juventus soccer superstar, in late August.

Second, the club released its fourth-quarter financial report covering the three months ended on 30 June 2021.

Both events served as positive catalysts for the stock price as indicated by the performance of MANU shares. In September alone, shares of the club rose more than 12% while they are accumulating an 18% advance since the year started – excluding this morning’s pre-market downtick.

However, if this morning’s decline spills over to the live session, the price would be moving below the stock’s short-term moving averages and that would be a strong signal that a full-blown trend reversal is set to occur.

Moreover, the stock appears to have made a double top at $20.5 per share as indicated in the chart and that further favors a bearish outlook.

Momentum oscillators were already showing signs of weakness as the Relative Strength Index (RSI) posted a double-top despite the price climbing to a higher high while the MACD’s positive histogram readings had been steadily declining.

All things considered, the technical outlook for the stock is bearish if the price breaks below its short-term moving averages and the next critical area of support would be found at $16.63 per share – the 200-day simple moving average.

Manchester United Shares – Fundamental Analysis

It is interesting to note that this share sale from the two members of the Glazer family occurred when the price moved close to the $20 mark – same as with the March sale. It seems that this price is attractive enough for the club’s top shareholders to cash in.

One way to interpret that the two sales occurred at this price level is that the club’s owners believe this price is significantly overvaluing the company or that it is at least close to its fair value. The timing of the two sales is a factor that should not be ignored.

That aside, the Manchester United brand is considered the third most valuable household name among soccer clubs and it was recently valued at €1.13 million by Brand Finance. If this decline spills over to the live session as is, the market capitalization of the stock would drop to $2.8 billion (€2.42 billion) and that means that the company is being valued at only 2 times the price tag of its brand.

That is not a particularly lofty metric and this may be an opportunity to grab some shares of one of the world’s most popular and valuable soccer clubs at a decent price. That said, even before the pandemic stroked the club was struggling to make ends meet as it reported losses in two of the four preceding years (2016 to 2019).

For years there have been rumors about the Glazers possibly selling the club. What seems to be relatively evident is that a price tag for the Manchester United that they might be willing to accept would be near or above the $20 level. Therefore, as a special play kind of investment, if the soccer team is sold, chances are that the selling price will be significantly higher than the current quotation.

Buy MANU Stock at eToro with 0% Commission Now!