Royal Mail’s share price is down by a percentage point in the early hours of today’s trading session. The weekly start is a continuation of last week’s strong and aggressive bearish trend, which was down by more than 10 percent at some point during the week.
Last week also saw Royal Mail warning about a possible loss-making streak if the scheduled series of proposed strikes take place later this month and early September. The strikes, which have been organized by Communication Workers Union (CWU), are scheduled to take place on August 26 and 31, as well as on September 8 and 9, after a disagreement on a pay rise.
Royal Mail blames CWU for their refusal to accept the 5.5 percent pay increase, which would have seen the company adding £230mn to Royal Mail’s annual “people costs” at a time when the company has continually struggled to make a profit. Based on its recent financial report, the company indicated they were making a loss of million pounds a day. In addition, the proposed pay rise by CWU is projected to add a further half a million pounds a day to its current figure, terming it as untenable.
With data showing Royal Mail struggling to make a profit, the problems have been translated into the markets, and we are starting to see a sustained bearish trend. In addition, the company’s announcement that it was planning to split the company into two has also put most investors on edge and may impact Royal Mail’s share price.
Looking at the chart below, it is clear that we are at the start of another major downswing. Therefore, my Royal Mail share price prediction expects the price to continue falling. There is a high likelihood that we may see prices dropping to trade below last week’s price low of 255.5p.
My analysis will only be invalidated should the prices trade above the 275 price level. At that point, it will be apparent that a recovery is still possible.
This post was last modified on %s = human-readable time difference 11:56