RR. Rolls Royce volatility

[knk]

Could someone explain why RR stock is so volatile? It should be steady, affected by large factors but why the short time period volatility?
Is it due to speculation over and under estimating perceived changes in value?

[fido]

I thought it would be obvious that the uncertainty over the level air travel in the next few years is going to impact the Civil Aerospace sector. Ditto IAG. of course there could be winners and losers in the longer term. This will bring out the optimistic investors and hence the buoyancy of these stocks.

[Condi]

RR are paid per engine hour, rather than paid per engine sold. They also supply mainly long haul aircraft types. Lots of planes being sat on the ground is not great for their cashflow and profitability!

[NickCQ]

Don't forget the debt, which is roughly equal to the market cap. 10% change in enterprise value leads to 20% change in equity value.

[Crudeoink]

They sold off a huge number of shares around November time, aircraft not flying at the moment and massive debts. They're in a pretty rough situation IMO

[rfisher]

At 588p this day last year.

108.55p today.

That's either a company going bust or a chance to realise a 200-500% gain over the next 6-12 months.

As I have not the first clue when it comes to stockmarket gambling, I've no idea which is the case.

Engines will be running soon though.

[Crudeoink]

rfisher said:

At 588p this day last year.

108.55p today.

That's either a company going bust or a chance to realise a 200-500% gain over the next 6-12 months.

As I have not the first clue when it comes to stockmarket gambling, I've no idea which is the case.

Engines will be running soon though.

I doubt you'll see a significant rise, this is from IG in October:

The recapitalisation will result in 6.43 billion new shares being issued, assuming all rights are taken up, which would result in Rolls Royce’s share capital increasing 333% from 1.93 billion to 8.36 billion shares in issue. Any shareholder that doesn’t take up their rights will be diluted by almost 77%.

[knk]

My view is the fundamentals are sound, with large external factors affecting the business, but the in-day volatility surprises me. Relatively large changes with very little change to the overall narrative.
I think they will recover to closer to 500 than 100 in a year.

I guess because I am an investor not a trader

[marked1]

Share price will never return to 500p as its never been there due to the dilution of shares last year to generate cash. SP was close to £2.50 at the end of 2019 which means that they are half way there which is a decent. RR make the money from servicing of engines as opposed to selling the engines. Obviously with the current climate has not been to fortunate for them.

I believe the airlines will see the recovery first before the engine supplier but i think RR are not the powerhouse they once were. There is some big restructuring happening within RR to help cut costs. Defiantly a recoverable stock in the future but may take years.

Obviously this is my own opinion,