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ASOS shares have crashed 60%! Is now the best time to buy?

ASOS shares are down nearly 60% in the past year, but is this a discounted price? And should I buy now? Prosper Ambaka Investigates.

by | Last updated 27 Nov, 2022 | Consumer Discretionary

share price crashing and collapsing

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  • ASOS share is down nearly 60% over the past year.
  • The company intends to move the London Stock Exchange from AIM by the end of February 2022.
  • ASOS delivers robust results amidst the challenging market conditions.

ASOS (LSE:ASC) shares have performed abysmally in the past year. In fact, the company’s stock is down nearly 60% as I write. In contrast, the FTSE 100 is up over 15% in the same period. Will ASOS’ intention to join the London Stock Exchange Main Market be a catalyst to turn the tides of the company’s stocks? And is now the best time to buy the ASOS shares?

How has the ASOS share price performed over the year?

ASOS plc is an online retail fashion company that focuses on fashion products for 20-somethings. The company has over 85,000 products, 850 third party brands, and a 26.7 million customers base.

The ASOS share price has been very volatile over the years. At the time of writing, the ASOS stock is up nearly 10,000% since its IPO in 2001. This is a mouth-watering performance, in my opinion. During this period, the company’s stock climbed as high as 7,770p in March 2018 and as low as 975.20p per share when the lockdown was introduced due to the Coronavirus.

Today, the company’s stock trades at 2,099p per share. It has since more than doubled its Covid-19 pandemic lows. Needless to say, this stock is not for the faint-hearted or the emotional investor, for it would be a troubling time for such investors. Let’s look at its fundamentals.

ASOS plc’s P1 Results

ASOS released its P1 results on 13 January 2022. The company delivered robust performance amidst the challenging market conditions. Revenue grew by 5% year over year in the reported period, while 300,000 customers were added to its active base bringing the total to 26.7 million. Despite the supply chain disruptions and the emergence of the Omicron variant, ASOS has managed to experience some growth. These fundamentals seem strong to me and I don’t expect ASOS shares to be down for too long. 

Furthermore, the business announced that it intends to move to the London Stock Exchange Main Market by the end of February 2022. The mixed results together with the ASOS’ intention to move to LSE Main Market made the stock appreciate over 11%. Though this move could cost the fashion company between £10m and £13m, it is a worthy expenditure, in my opinion. The move will make the ASOS shares be traded in larger bulk by both institutional and retail investors.

Is now the best time to buy ASOS Shares?

With the ASOS share price down nearly 60% in the past year, it could be a good time to buy. Nonetheless, I cannot predict how far southward the stock can go—considering that the company’s stock is very volatile and has gone as low as 975.20p during the pandemic.

In my opinion, the ASOS fundamentals are strong enough to keep its share price up. Hence, I see now as a good time to buy for my portfolio. In any case, only time will tell if I’m right. Meanwhile, here are 3 Warren Buffett lessons every investor should know.

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Prosper Ambaka does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.

Written By

Prosper Ambaka, Esq.

Prosper is a self-taught financial analyst and investor with years of experience. Inspired by Benjamin Graham, he employs a value-investing school of thought throughout his analyses. This has led to Prosper developing a wealth of knowledge in equities, foreign exchange, commodities, and global macroeconomic issues.

In 2019, he completed his Law degree and was called to the Nigerian Bar in 2021. Outside The Money Cog, Prosper encourages others to join the investment community through his lectures on financial literacy as well as investing strategies.

Current Holdings

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Edited & Fact Checked By
Zaven Boyrazian MSc

Zaven has worked in several industries throughout his career, from aircraft factories to game development studios. He has been actively investing in the stock market for the better part of a decade, managing over $1 million across multiple portfolios.

Specializing in corporate valuation, Zaven employs a modern take on the principles set out by Benjamin Graham to find new opportunities at fair prices.

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