We’ve written about French luxury mall owner and operator Klépierre twice before – first in late-November, 2021, and then in July, 2022. On both of these occasions we were bullish as the stock was trading below €20 a share. Currently, it stands above €25 for a gain of more than 25%. Coupled with the 8% dividend yield at the time of writing, the actual total return over those two and a half years is close to 50%.
Fundamentally speaking, the stock is still far from expensive. The problem is that in the era of AI, a boring mall company can hardly attract the attention it needs in order to reach full valuation. Besides, Klépierre ‘s daily price chart reveals a troubling Elliott Wave setup. Take a look at it below.
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The recovery from the pandemic bottom at just over €10 a share has been messy and difficult. It can be seen as a W-X-Y double zigzag correction. There is an impulse in the (a)-waves of both W and Y, but wave (a) of X is a leading diagonal instead. Wave (b) of Y is a triangle correction, which naturally precedes the final wave of the sequence, in this case wave (c) of Y.
If this count is correct, the post-pandemic recovery in Klépierre stock is over and the prior downtrend might have already resumed. Corrections are supposed to be fully erased, putting bearish targets below €10 a share in the realm of possibility. But if you think that a single-digit price would be too low for such a stable, profitable and reliable company, we agree. That’s why we’ve identified another, less extreme Elliott Wave scenario to keep in mind. Unfortunately for the bulls, it is still mid-term negative.
It is possible that Klépierre has been drawing an expanding triangle correction in wave B ever since the top of wave A at €25.93 in June, 2021. Under this scenario, waves (a), (b), (c) and (d) of B are already in place, while wave (e) down has yet to develop. It is supposed to breach the low of wave (c), which makes downside targets near €15 plausible, before the bulls can return in wave C towards €30 a share.
Whichever one you pick, none of these two counts bodes well for Klépierre mid-term. Even the less bearish of the two still implies a 40% drop. In our opinion, investors would do well to avoid the stock for the time being and watch from a safe distance.
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