The Royal Mail share price has risen in the past four consecutive days as investors buy the dip. RMG is trading at 353p, which is about 12% above the lowest level this month. The shares remain substantially below their year-to-date high of 33%. Other firms in the delivery business have struggled this year as signs emerge that online shopping is slowing.
Royal Mail has come under intense pressure as short-sellers remain concerned about the company’s recovery. Its short-interest has risen to about 3.4%, with hedge funds like Marshall Wace and Millennium Capital betting against the company.
Notably, the company’s biggest shareholder, Daniel Kretinsky is also finding it tough as its energy business struggles. He owns about 49% of Eurostream, a company that owns a gas pipeline from Russia to Europe. He has also watched his stake in Royal Mail struggle as the share price has collapsed from its highest level this year. Also, his 10% stake in Sainsbury has declined by 30% from its 2021 highs.
Some analysts believe that Daniel could push for Royal Mail to spin off its European delivery business known as GLS. Royal Mail share price rose last week even after data showed that e-commerce sales in the UK were slowing down. They dropped by more than 20% in March as people moved back to in-person shopping. As such, the firm will struggle considering that it made substantial revenue as demand for delivery rose.
In my previous RMG stock price forecast, I warned that the shares would likely drop below 300p soon. That prediction did not work out as the shares found strong support at around 323p. A look at the four-hour chart shows that it has formed a descending trendline that is shown in purple. It has also moved slightly above the 25-day and 50-day moving averages while the MACD has risen above the neutral level.
Therefore, I still expect that the Royal Mail share price will resume the bearish trend and retest the important support at 323p. This will likely happen towards the company’s earnings in May. A move above the resistance at 380p will invalidate the bearish view.
This post was last modified on Apr 25, 2022, 07:06 BST 07:06