The coronavirus pandemic had unleashed complete chaos in the capital markets in 2020 and that resulted in many stocks hit historic lows across sectors. One of those stocks was that of British company Rolls-Royce Holding PLC ADR (OTCMKTS:RYCEY).
Key Thing to Watch
While many stocks have since recovered from the slump, the situation with regards to the Rolls-Royce stock has not improved in 2021.
Rolls-Royce Holding PLC ADR (OTCMKTS:RYCEY) has continued to nosedive so far this year and in such a situation, it is perhaps time for investors to take a closer in order to make up their minds about the stock.
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In this regard, it should be noted that in the period from September and November last year, there was a bit of a rally in stocks that had been beaten down for months.
Rolls-Royce was one of those stocks but the rally didn’t last and soon enough the stock gave up those gains. The descent from its November highs was swift and up until January 19, the stock had lost as much as 50%.
While the coronavirus pandemic is a factor, it is necessary to keep in mind that the company had been suffering from a range of troubles from before that. For instance, at the start of 2020 and before the onset of the pandemic, the stock was trading at less than 50% of the levels that it had hit back in 2014.
Hence, the current problems are not new. On the other hand, certain issues have been reported with regards to two of its engine models as well.
While the problems with the engines were raging, Rolls-Royce was also in the middle of a demand deficit for wide-body planes and that had also been a source of a lot of pain for the stock.
In recent times, the company has taken many drastic measures starting from asset sales to debt issuance in order to survive in the near term.
Analysts believe that the stock could still decline by as much as 8.3% and hence, investors could consider avoiding the stock for the time being.
Disclaimer: We hold no position in RYCEY stock.