74.07% of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.07% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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    Vodafone share price and the journey to 5G

    The Vodafone share price should have seen a big win in 2020. The 5G rollout is ongoing, and has been underlined by the adoption of this new high capacity technology. Apple’s latest iPhone 12 series launch has made 5G mainstream. In addition, lockdowns and the work from home phenomenon have made the need for extra fast bandwidth both on fixed and mobile, even more important.

    However, even though Vodafone shares pay a chunky dividend, it would appear that investors have been more focused on company and sector issues, rather than the undoubted opportunity in telecoms.

    Learn more about shares trading with us

     

    Vodafone share price in 2020

    One of the characteristics of stock market corrections is that the “baby is thrown out with the bathwater.” The general correction in shares in the wake of the COVID-19 wave in March was that blue chips of all sectors were sold off, and this was the case with Vodafone shares.

    Indeed, the stock fell from a pre-pandemic peak at 158p in January down to an intraday year low of 92p in March. While there has been a tentative recovery since then, none of the positive fundamentals which have emerged since COVID-19 have been incorporated into the valuation in a material way.

     

    Headwinds for the VOD share price

    While the good news for Vodafone and the Vodafone share price is that there is a frenzy of activity in its space, particularly associated with the arrival of 5G, the other side of the coin is competition. This can mean margins are squeezed in order to attract customers.

    This is the last thing a company needs when there are also concerns over debt. There is still a massive debt overhang equivalent more than the present £31bn market value from the purchase of Liberty Global.

    This has to be worked out of the system in terms of the group’s finances. If one adds in an ongoing battle for Vodafone with the authorities over its operations in India, then those looking for value in Vodafone shares face the problem of a stock which could be regarded as a value trap.

     

    Vodafone shares value trap?

    The definition of a value trap on the stock market is a situation where a company’s shares are at the bottom of the range, and it pays an attractive dividend. Such dividends are offered to entice investors into situations where sentiment may be negative.

    In the case of Vodafone shares they currently pay out a 7% yield. This is one of the highest dividends in the blue chip FTSE 100. The question now is whether Vodafone shares can afford to continue to be so generous?

     

    The return of revenue for Vodafone shares

    What will be key for the VOD share price going into 2021 is whether there will be enough revenues at the telecoms giant to offset the cost of servicing the Liberty Global debt. Selling off its masts business, Vantage Towers, should be a positive move, as announced earlier this year.

    However, in order for Vodafone shares to sit with comfortable finances and happy investors, revenues have to start growing strongly. This is even if Deutsche Bank’s 230p sum of parts valuation of the company as compared to the share price of half this level is to be believed. It will therefore be key to see the revenues position on November 16 when the Q2 earnings are revealed.

    To see all upcoming news and data releases that’ll have an effect on the financial markets, check out our Economic Calendar. It’ll cover all major releases from global economies and give you the exact time the release is due, the previous data, forecast data and actual data (once released).

     

    How to trade shares with ATFX

    Looking to trade Vodafone shares and other major company shares? Open a live or demo account with ATFX to get up to speed. Start trading now to benefit from competitive spreads, high-quality trade execution, and no commission.

    1. Register for an account or log in to your existing account

    2. Open MT4 either on your desktop or mobile

    3. Search for Vodafone shares in the market watch or symbols window

    4. Choose your position size

    5. Hit buy or sell, and then confirm the trade

     

    Vodafone share price daily chart

    Daily chart analysis showing Vodafone share price daily movements for 2020

     

    Looking for a great trading platform, look no further. MetaTrader 4 is the world's most popular trading platform for a reason. 

    It offers a host of functionality that will boost your trading experience. From advanced indicators to automatic trading as well as alerts and trade signals.

    Last Updated: 12/11/2020

    This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


     

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