Over the years, Rolls-Royce has built a reputation as being the best luxury car brand on the market. However, its performance in the markets has been dismal for the past few months. This has seen it lose 34 per cent of its value since the year started and is down by four per cent in June, despite it going up by over 8 per cent in the early days of the month.
Why is Rolls-Royce underperforming?
In the past few weeks, Rolls-Royce has been in the news for all the right reasons, including an announcement by the Chief Executive Officer of Rolls-Royce, Warren East, that the first Atlantic flight powered solely by sustainable aviation fuel would be possible as early as next year. The company has also announced the release of the Phantom model, which is also expected next year. Their commitment to electric vehicles has also not gone unnoticed.
However, despite all these positive steps the company has taken, its shares continue to take a beating in the markets. Part of the reason is the rising cost of living, fueled by inflation and rising interest rates. These economic factors have continued to affect how the company operates, including its staff.
Although the company has started to take steps to help ease the scourge of inflation by offering £2,000 to help ease the cost of living crisis, the markets are yet to respond positively to such measures.
Rolls-Royce Share Price Analysis
In my previous Rolls-Royce analysis dated June 15, I expected the prices to start recovering. At the time, the economy was starting to come to life, and it looked likely that it would have an impact on the share price of Rolls-Royce. However, the price action of the last few days indicates that my price analysis was off by not accounting for the worsening global economic outlook.
However, based on recent price action and the current market conditions, my Rolls-Royce price prediction expects the prices to continue falling. There is a high likelihood that we will see the prices trade below the 80p support level. My bearish analysis will be invalidated if the price rises above 85.