The Royal Mail (RMG) share price tilted upwards on Friday as some investors rushed to buy the dips. The stock rose by more than 1.37%, becoming the third-best performing stock in the FTSE 100 after the London Stock Exchange (LSE) and Flutter Entertainment.
RMG fundamental analysis
Royal Mail is the leading postal and delivery company in the UK. As a result, the firm benefited substantially during the pandemic as demand for parcel services jumped. This trend has continued this year, as evidenced by the company’s first-quarter report.
In the report, the firm said that its revenue jumped by more than 12% in the quarter. This happened as the parcel volume declined by 13% while it increased by 3.4%. Letter volume increased by 25%.
Therefore, the Royal Mail share price has struggled as investors price in slower growth as more people start shopping in stores. Still, the company expects that the growth will slow at a slower pace than what the market expects. In its financial results, the firm said that there were early signs that domestic parcel volumes appeared to be rebasing at a higher level than pre-pandemic levels. So, what next for the RMG stock?
Royal Mail share price August forecast
The daily chart shows that the RMG share price has been under intense pressure after it rose to a high of 612p on July 12. The stock has moved below the 100-day and 50-day moving averages. This is a worrying sign because it sends a signal that there are more sellers than buyers in the market. The Relative Strength Index (RSI) has moved below the oversold level.
Therefore, the stock may keep falling as bears target the next key support level at 450p, which is about 10% below the current level. On the flip side, a jump above 500p will invalidate the bearish view. This is in line with my previous forecasts on Royal Mail.