Dell stock price forecast: Is this an irrational sell-off?

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The Dell (NYSE: DELL) stock price has been in a major sell-off in the past few weeks as investors worry about the pc industry. The shares are trading at $48.80, which is close to its lowest level since September 2021. It has fallen by about 20% from its highest level this year, bringing its market cap to about $37 billion.

Why has DELL tanked?

Dell Technologies is a leading technology company that focuses on personal computing devices and data center equipment. 

It is a top company that generates over $101 billion in annual revenue and over $5.6 billion in net income. Before the pandemic started, the firm had $84 billion in revenue, meaning that it has been a major beneficiary of the pandemic.

Now, there are signs that its key segments are slowing as the economy reopens. People who wanted to buy PCs to work from home have already done so. At the same time, demand for data center equipment will likely be a bit weak. 

This explains why the Dell stock price has fallen sharply in the past few months. Analysts have downgraded the stock and warned that the firm will struggle going forward. 

On Friday, analysts at Goldman Sachs decided to remove the stock from the closely-followed conviction list. They also removed HP, Dell’s biggest competitor. In the same period, analysts at Morgan Stanley decided to slash their estimate for the stock noting that PC weakness is a big factor. 

Still, there are some reasons why the Dell share price will rebound in the coming months. For example, the company is still implementing a $5 billion share repurchase program. Its plan is to return between 40% and 60% of cash flow to shareholders. It also announced that it will start paying dividends in its most recent earnings.

Another catalyst for the stock is that investors are likely exaggerating the soft demand for personal computers in the coming months.

Dell stock price forecast

The daily chart shows that the Dell share price made a strong bearish breakout recently. The stock managed to move below the lower line of the ascending channel. It has also dropped below the 25-day and 50-day moving averages while the MACD has continued to drop. 

Therefore, after falling below the support at $49.11, there is a likelihood that the stock will keep falling as bears target the next support at $40. In the long-term, Dell will likely bounce back because of the market share in the industry.

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