Societe Generale share price has done well in the past few months and is slowly nearing its highest point on record. It jumped to a high of €67.85, its highest point since May 2007. It has soared by 680% from its lowest point in 2021, bringing its market capitalization to over €51 billion.
Why Societe Generale share price has soared
The Societe Generale stock price has been in a strong uptrend in the past few months, mirroring the performance of other European banks like Unicredit, Lloyds, and Barclays.
The stock did well as the company’s revenue and profitability growth gained steam, even as the European Central Bank (ECB) delivered its interest rate cuts during the two years.
For example, the most recent results showed that the company’s revenue jumped by 5.7% in the first nine months of the year to €20.5 billion.
The revenue increase coincided with its cost reduction process. Its costs dropped by 2.2%, much higher than what it had predicted. This decline was because of its asset disposals and layoffs.
Societe Generale’s net income stood at €4.6 billion in the first nine months of the year, up by 45% from the same period last year. All these numbers were much better than its guidance.
At the same time, the company continued returning cash to investors in the form of dividends and share buybacks. The company recently completed its €1 billion share buyback program and announced a new €872 million dividend.
Meanwhile, the stock has benefited from its simplification process as it exited key markets like Guinea and Mauritania. It also exited its private banking businesses in Switzerland and the UK.
The company, like other major players in the markets, benefited from the trading boom because of Donald Trump’s volatility. Its Global Banking and Investor Solutions business made €2.5 billion in the third quarter, up by 1.6% from the same period last year.
Societe Generale’s balance sheet also continued to improve, with its CET1 ratio rising to 13.7% from 13.3% in the same period last year.
Still, the main risk for the stock is whether it can replicate its performance in the coming year now that interest rates are coming down. The ECB has slashed interest rates to 2%, and some analysts predict that they may continue falling in 2026.
Societe Generale stock price technical analysis
The weekly timeframe chart shows that the Societe Generale share price has been in a strong uptrend in the past few years as its revenue has jumped and its costs have dropped.
However, technical analysis suggests that the rally has become highly overbought and is at risk of a decline in the coming year.
The Relative Strength Index (RSI) has jumped to 76, up from last year’s low of 38. Similarly, the Stochastic Oscillator has continued rising and is now at the highest point in over a year.
Most importantly, the stock remains above the 50-week and 100-week Exponential Moving Averages, which are at €49 and €40.60. As such, there is a likelihood that the stock may go through a mean reversion.
Mean reversion is a situation where an asset moves back to its historical averages. As such, the stock may drop to the key psychological level at €50 and then resume the uptrend.
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