The Royal Mail share price has found no love recently. After soaring to a year-to-date high of 603p in June, the stock has crashed by 20%. This means that the stock has moved into a bear territory.
RMG trading statement
Royal Mail was one of the top beneficiaries of the Covid pandemic as the number of people shopping online increased. This helped the firm drive its parcel business.
As a result, its shareholders were rewarded handsomely after the stock jumped by more than 420% between May last year and June this year. This strength pushed the company into the FTSE 100 club.
Now, there are jitters that the company will not maintain its strong performance as the UK economy reopens. Indeed, in a recent note, analysts at Credit Suisse downgraded their Royal Mail share price target to 581p from the previous 647p.
The next key catalyst for the stock will come out on Thursday 23rd when the company publishes its July and August trading statement. The statement will provide more colour about the state of the business and whether its growth has continued well.
In the long-term, however, the company faces significant challenges considering that the trend of online shopping will start slowing down. The only hope is that the percentage of e-commerce will remain above where it was before the Covid-19 pandemic.
Royal Mail share price forecast
The daily chart shows that the Royal Mail share price has been under intense pressure lately. It has moved into a bear territory and is slightly below the 23.6% Fibonacci retracement level. At the same time, the 100-day and 50-day moving averages have made a bearish crossover.
Therefore, the path of the least resistance for the stock is to the downside, with the next key level to watch being at 417p. This is about 14% below the current level. On the flip side, a move above 500p will invalidate the bearish view. You can read my RMG share price forecast for September here.