Royal Mail Share Price Forecast: Not Looking Good For Now

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The Royal Mail share price is not doing well. The stock ended Thursday at 553p, which was almost 10% below its year-to-date high. The RMG stock is still up by more than 75% this year and is the best performer in the FTSE 100 index.

Royal Mail recently became the newest FTSE 100 index member after its share price soared. This happened after the company’s revenue surged during the coronavirus pandemic, pushing the company to return its dividend.

The company also experienced higher parcel revenue than letters in 2020 for the first time on record as more people embraced e-commerce. Most importantly, the company benefited directly from the pandemic as it received a contract to supply vaccines.

However, investors are aware that the Covid bump will not last forever. For one, the NHS will soon end its contract since many people in the UK have already received the vaccine. Also, as the country reopens, the volume of online orders will reduce. Indeed, companies like Tesco and Ocado have warned of the imminent slowdown in business.

Still, the company has some catalysts. The most important one is its European parcel business known as GLS. The company expects that this business will have a 12% growth this year. Its profit is set to grow to more than half a billion euros. So, should you invest in the Royal Mail shares?

Royal Mail share price forecast

The Royal Mail share price has struggled recently as shown on the four-hour chart below. The stock has formed a small downward channel that is shown in blue. Indeed, this week, it drifted below the lower side of this channel. It has also moved below the 25-day and 50-day moving averages.

Therefore, a closer look shows no bullish catalyst at the current level. As such, there is a possibility that the stock will keep falling as investors target the next key support level at 500p, which is about 10% below the current level. In the longer term, however, the stock will likely rebound as investors buy the dips.