The Royal Mail share price has struggled in the past few weeks. Indeed, its shareholders have been disappointed as the stock has declined by about 20% from its highest level this year. At the same time, the stock’s volume has also dropped substantially.
Royal Mail Group has lost momentum. The RMG share price rocketed from last year’s low of 117p to a high of 621p this year. This was a whopping 415% return, which propelled the company into the FTSE 100 index.
This remarkable growth was mostly because of the company’s strong demand during the Covid pandemic as more people embraced e-commerce.
Recently, however, there are concerns about whether Royal Mail will be able to sustain its growth. Besides, the UK has removed most of its Covid restrictions. As such, some analysts believe that the company will see slow growth as most of these people go back to physical retailing.
Another key concern for Royal Mail is that its business is being disrupted by well-funded technology companies. For example, early this week, Deliveroo and Boots announced a partnership that will see the former deliver products in as little as 20 minutes. Other companies posing significant challenges are Hermes and DPD.
Still, some analysts believe that the recent performance of the Royal Mail share price make it a viable contrarian investment. They point to the fact that the pandemic has changed how people shop, meaning that its business will do better than it did before the pandemic started.
The daily chart shows that there is nothing much to say about Royal Mail. Besides, the stock has been in a tight range in the past few weeks. What’s evident is that the shares have moved below the 50-day and 25-day moving averages (MA) while the MACD has moved below the neutral level. Its volume has also lagged.
Still, a closer look shows that it has formed what looks like a bullish flag pattern. Therefore, while it is too early to tell, there is a possibility that the stock will see a major rebound in the coming months.