close icon

Two Years Ahead of Interpublic ‘s 55% Collapse

Interpublic and Omnicom used to be the giants of the advertising world. In the old economy, their competitive advantages seemed indestructible. Then, the Internet revolution came along and Facebook and Google created a lot of problems.

However, their stocks were still making new highs until two years ago. Interpublic stock, for instance, was hovering around $24 a share in March 2018. That is when we first heard that some large hedge funds had placed big bets against the two firms. A quick look at the charts convinced us the shorts were really up to something.

interpublic stock elliott wave analysis

Let’s focus on Interpublic. The chart above was published on March 13th, 2018. In revealed a complete five-wave impulse to the upside, labeled 1-2-3-4-5. Two degrees of trend within wave 3 were also visible. Wave (v) of 3 was an ending diagonal.

Wave 5 had just reached a new high, thus completing the pattern, which had been in progress since November 2008. The elephant in the room was the fact that the Elliott Wave principle states that every impulse is followed by a three-wave correction.

Hedge Funds’ Bets Against Interpublic Paid Off in Spades

So instead of joining the bulls near $24 a share, we thought a major retracement should be expected in the years ahead. Our rough estimates suggested “It could easily erase about 50% of Interpublic’s market capitalization.” The next chart shows how the situation developed.

Interpublic stocl slumps 55% in Elliott Wave correction

The bears couldn’t achieve momentum right away and Interpublic appeared to be in no-man’s land until February 2020. Then the coronavirus panic triggered a selloff to as low as $11.63 a share in March 2020. In just two years, Interpublic shareholders saw the value of their holdings tumble 55%.

The decline from $26.01 can be seen as either a simple A-B-C zigzag or a regular flat correction. In both cases, the 5-3 wave cycle, which began in late-2008, appears to be complete now. According to the theory, we can now expect the price to move in the direction of the impulsive sequence.

Besides, Interpublic’s revenue rose from $7.6 to $10.2 billion between 2015 and 2019. This shows that the company is able to adapt in this rapidly-changing environment. Strong fundamentals and a bullish Elliott Wave setup make the stock a promising long-term bet.

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!

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Intel ‘s Troubles Fit in its Elliott Wave Correction

2020 is shaping up as a year to forget for Intel shareholders. The stock is down over 20% year-to-date. First, the coronavirus selloff caused a 35% plunge down to less than $44 a share. And just when it seemed INTC was recovering, the company announced it will delay its 7nm products until late 2022 or…

Read More »

Expedia Stock can Surge as Travel Returns

The coronavirus pandemic hit no other sector harder than travel. Lockdowns took a heavy toll on airlines, hotels and even rental car services as people postponed vacations and business trips were cancelled. Even asset-light companies like Booking and Expedia saw their stock prices plunging. Expedia, which was down 25% from its all-time high even before…

Read More »

Plus500 Confirms Uptrend, but Correction is Likely

Based in Haifa, Israel, Plus500 (LSE:PLUS) operates a leading CFD trading platform. The company is part of the FTSE 250 index and conducts most of its business in Europe and Australia. The new ESMA regulations which came in effect in August 2018 severely impacted the CFD trading industry. As a result, Plus500 stock fell from…

Read More »

Moody’s, a Buffett Darling, Trading in Late Fifth Wave

Moody’s Corp. has been a long-time holding in the Berkshire Hathaway portfolio. It is also the seventh biggest position in it as of the end of March 2020. The company has a strong competitive advantage, it is highly profitable and growing. No wonder Warren Buffett likes it so much. The stock did decline sharply in…

Read More »

Dollar General Stock Bulls are Looking for Trouble

As a general merchandise discount retailer, Dollar General was among the handful of businesses that actually benefited from the pandemic. People piled on necessities preparing for what looked like the end of the world for a while. As a result, sales at Dollar General surged in the midst of the crisis. While its stock price…

Read More »

Veeva Systems Stock Trades in Bubble Territory

It is true that the Fed’s recently re-adopted zero rate policy and stimulus are distorting financial markets. Interest rates are like gravity to financial assets. The lower the rate, the higher asset prices go and vice versa. As a result, stocks in general tend to ignore the economic reality right now. Among the companies trading…

Read More »

PNC Financial Completes Bullish Elliott Wave Cycle

Economic crises have always been especially tough on financial companies. Usually, when the general market is falling, financial stocks are crashing even harder. PNC Financial for example, lost 81.6% in the 2008-9 recession, while the S&P 500 fell by “just” 58%. PNC Financial stock suffered more than the general market during the recent coronavirus selloff,…

Read More »

More analyses