Why did the Rolls Royce share price drop today and will its rally continue?

Home > Analysis > Why did the Rolls Royce share price drop today and will its rally continue?
Rolls Royce Share Price

Rolls Royce’s share price LON:RR dropped briefly today as the stock marked time ahead of its FY 2024 results and investor roadshows.

Rolls Royceโ€™s share price dropped today but soon recovered to be trade flat compared to yesterday’s close but why was there a dip at all?

Well, to answer that we only need to look at the performance stats for the companyโ€™s shares over the medium term.

And, when we do that, we find that the stock has risen by +460.0% over the last two years.

Making it one of the best, if not the best performer, among FTSE350 stocks over this time frame.

Given those returns it’s no surprise that the share price has the occasional wobble.

The rally in the stock is down to the root branch transformation of the company undertaken by CEO Tufan Erginbilgic.

Who, when appointed to the role, described Rolls Royce to its employees, as a burning platform.

Mr Erginbilgicโ€™s reforms have been painful and resulted in numerous job losses at the company.

However, the decision to right-size the business, exit non-core activities, reduce headcount and reign in costs and expenditure was exactly what the market and investors wanted to hear.

Rolls-Royce is also looking to the future and wants to use its nuclear expertise to build the next generation of Small Modular Reactors.

Though rather oddly it has had to look to Europe to provide it with its first contract in this area, despite the fact, that the UK government is keen to see the technology deployed in Britain.

That said, it has recently won an eight-year deal worth ยฃ9.0 billion, from the UK Ministry of Defence, to develop, build and support the reactors for a new fleet of nuclear-powered submarines.

Analysts at US bank Citi, believe that Rolls Royce should avoid the worst effects of Donald Trumpโ€™s tariffs, as only 8.0% of the jet engines it makes to power wide-bodied jets, were exported to the US last year, whilst just 7.0% of the firm’s Trent aero engines are based in America.

Whatโ€™s more, much of Rolls Royceโ€™s defence work for the US government is undertaken in-country, and therefore won’t be subject to the tariffs on imports into the US, should they be applied to UK and European goods.

Rolls Royce will report its FY 2024 results on February 27th and will start a roadshow to US investors on March 3rd.

Scroll to Top