Rolls-Royce share price is under intense pressure today as investors react to the new strain of the virus and the recent news about its cash burn. The stock ended last week at 113.95p, which was lower than the December high of 135p.
What’s moving Rolls-Royce: Rolls Royce, the giant UK engine manufacturer, has been under intense pressure lately. The Covid-19 pandemic has led to a sharp decline in demand for aircraft, affecting its civil aviation business that accounts for more than 51% of its total sales.
Also, with many wide-body aircrafts being parked, the company has lost the funds it uses to service them. In a recent statement, the company said that these issues have pressured its finances, leading to a significant increase in its cash burn. Precisely, it said that its cash flow would be about £4.2 billion this year. That was 5% higher than the previous guidance.
What about the new virus strain? The biggest catalyst for Rolls-Royce share price today will be the new strain of coronavirus. In a statement, UK health officials said that the new strain was spreading 70% faster than the initial one. As a result, European countries like Germany and France announced that they would ban travel to and from the UK in the near term. That could incentivise other countries to do the same, which will affect the company.What about the vaccine? The latest news come at a time when RR share price has been powering-on because of the vaccine. Therefore, while the US and the UK have started vaccinations, there is a possibility that the process will be delayed. Also, scientists are trying to figure out the impact of the new strain on the vaccine.
What next for Rolls-Royce share price? RR share price ended Friday at 113.95. On the four-hour chart, the price has moved below the 25-day and 15-day exponential moving averages. It is also between the ascending channel that is shown in blue. Therefore, the likely scenario is where the price continues to drop as bears aim for the next support at 100p, which is close to the lower side of the channel.
