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Perfect storm for StarHub share price

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Nowadays, investors of StarHub cannot sleep well. From a high of almost $4.40 in 2015, StarHub share price crashed like a fallen star to reach the abysmal level of $1.64. The stunning decline of StarHub share price caught many investors off-guarded and caused much wealth destruction to many long-term investors. At the rate of decline, StarHub share price is definitely spiralling out of control. How low will it go?

On looking back, StarHub has managed to punch above its weight since it was launched in 2000. With share capital of only $300 million, this telco has managed to generate amazing Return-on-Equity (ROE) in the past. Henceforth, given its track record, it may be too early to dismiss the long-term potential of StarHub share price.

StarHub share price

StarHub share price lost form

The intriguing meltdown of StarHub share price must have left investors slapping their foreheads in astonishment. It seems so surreal as investors reminisce those good old days when StarHub was one of the leading lights of SGX.

Of course, nobody in his right mind would have predicted Starhub share price to suffer such a devastating run. This counter is, after all, considered one of the brightest blue chips that has consistently paid out handsome dividends. Against the backdrop of plunging StarHub share price, is it time for investors to cut losses and run for their lives?

The strategy for making money out of the volatile StarHub share price should be setting appropriate entry and exit levels. This is of course the sensible thing to do. Nonetheless, there are wealth builders who may advocate buying on the dip and accumulating the shares for purposes of dividend. Such an approach may not be flawed but it is built on the premise that StarHub share price will turn. However, there is no guarantee that such a day will come because telco stocks are previously known to be defensive stocks, and not cyclical stocks like property and oil and gas counters.

Where are the heroes?

The recent appointment of new CEO, Peter Kaliaropoulos provided a flicker of hope for the recovery of StarHub share price but that feel-good feeling was quickly extinguished soon after. Then the debut of MyRepublic provided some cheers for StarHub investors because of the leasing revenue to be generated from the Mobile Virtual Network Operator (MVNO). But that turned out to be another false dawn as investors finally woke up to the reality that there are four MVNOs in the market. The increase in revenue from MyRepublic would of course be offset by the loss of market share to the other three MVNOs.

To rub salt into wound, StarHub share price crashed in early June when the telco announced cessation of its Discovery Networks Channel after negotiation failure with Discovery over content costs. That blow sent StarHub share crashing to a record low of $1.61 as Discovery Networks Channel is one of its most popular channels and according to StarHub’s website, “customers are very angry over this development”.

Indeed, it would take a very brave hero to [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: September 3, 2018 — 3:14 am

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