According to Pandora A/S’ 2017 annual report, the Copenhagen-based company is the “leader in the affordable jewelry segment and the largest producer of jewelry worldwide in terms of pieces crafted.”
That leading position paired with double digit average earnings growth in recent years convinced many investors the company was a one-way ticket to riches. So, they kept buying Pandora stock until its price reached over 1000 Danish krone per share in May 2016.
Unfortunately, Pandora seems to have lost its shine recently as the stock is down by over 70% from its 2016 all-time high. In the meantime, the company is still highly profitable and not crippled with excessive debt. So it is a good idea to see what the Elliott Wave Principle has to say about the stock’s prospects.
Judging from the chart above, it looks like the market is offering long-term investors a great buying opportunity. The selloff since mid-2016 appears to be a simple (a)-(b)-(c) zigzag correction, following a five-wave impulse to the upside from DKK 34 in 2011 to DKK 1007 five years later.
Pandora the stock is ready to get its shine back, too
Wave (a) of II is a regular impulse, while wave (c) is an ending diagonal. If this count is correct, the 5-3 wave cycle is complete. The trend should now resume in the direction of the impulsive sequence. In addition, wave II seems to have ended shortly after touching the 78.6% Fibonacci level.
Interestingly, the impulsive phase of the 5-3 wave cycle took roughly five years, while the corrective phase took three. Three painful years Pandora appears ready to finally leave behind.
Did you like this analysis? Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!
Disclosure: The author holds a long position in Pandora A/S stock.
