Price AnalysisStocks

Royal Mail (RMG) Shares Hangs on a Thread: Prediction

  • Royal Main resembles firms such as Shopify and DocuSign.
  • The shares surged during lockdowns before resorting to declines.
  • RMG remained poised for a massive bearish breakout.

The Royal Mail has its share price approaching a crucial support zone as the stock sees fading demand. It trades under LON: RMG ticker. While writing this blog, the share trades at 300p, slightly beyond the the292p YTD lows. The stock has lost over 47% from 2021’s highest peak.

Why RMG Crashed

Royal Mail boasts similarities with companies such as DocuSign, Shopify, and Zoom Video. Whereas Royal Mail delivers parcels and mail traditionally, the rest are top-notch tech firms. Nevertheless, the companies boast similarities in market cycles, explaining why their stocks have plunged.

The primary reason is investors categorize these companies as lockdown stocks. That means the companies flourished during lockdowns as more individuals shopped online.

Indeed, Royal Mail saw its yearly revenue climb from 2019’s $13 billion to more than $17B in 2020. The booming business had the company making its initial acquisition, purchasing Rosenau last year. Also, it introduced a 400-pound special dividend to reward shareholders.

Nevertheless, Roya Mail struggled as the tides changed. Most United Kingdom residents buy in traditional stores, and mail sees a stubbornly low volume. Moreover, its operation costs surged amid soaring oil and wages costs. The union members’ dispute could not help.

Furthermore, Roya Mail warned about dimming business prospects during its latest earnings. It conformed its revenue surged to 12.71B pounds whereas net income plummeted to 612M pounds from 620M pounds. RMG will likely stay under pressure, with investors coping with low profitability as slow growth as new normalcy.

RMG Price Prediction

RMG stock has encountered massive sell-offs over the past couple of months. The downward move intensified when shares plunged beneath the crucial region at 382p, October 2021’s lowest mark.

Meanwhile, RMG stays beneath the 25 and 50day MAs. The Relative Strength index moved under the 50 neutral. Thus, breaking beneath the 292p support will confirm dominant bears and drag the share to 250p.

Stay tuned for upcoming developments in the financial world.

Editorial credit: chrisdorney / shutterstock.com

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