The Rolls-Royce share price is down over 60%. Should you buy in now?

first_img Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Andy Ross | Thursday, 20th August, 2020 | More on: RR Enter Your Email Address Image source: Getty Images. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. So far this year Rolls-Royce (LSE: RR) has been hit hard. The Rolls-Royce share price is down over 60%. It also missed out on the rally following the UK election last year. The problems the company faces, which pre-date the pandemic, have been made worse by the devastating effects of Covid-19 on the aviation industry. This industry is a major customer for Rolls-Royce.Rolls-Royce shares: cheaper but facing problemsAlthough buying a fallen share can be tempting, it’s not without risk. Even after a 60% fall, the RR share price can (and in my opinion, likely will) fall further.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…The main reason is that Rolls-Royce needs aircraft to be flying as it sells engines at a loss. Instead it makes its money from aftercare services and maintenance. This now makes Rolls-Royce a lot less money as planes are flying less. This situation is unlikely to change any time soon as I don’t see sentiment that could help the share price improving.To add to its owes, recently, the engineer has found signs of wear in compressor blades used in its Trent XWB-84 engines. This is another engineering failure after the company has spent more than £2bn dealing with faults in its Trent 1000 engines.Its customers need reassurance that they can trust Rolls-Royce. Engineering is a competitive business and eventually these mistakes will see customers exiting. The firm needs to up its game to keep its reputation.Another reason for concern is that a large investor, ValueAct, has just sold its entire stake, probably at a significant loss. Insiders apparently expressed frustration that six years of restructuring haven’t delivered better performance, as the latest engines issues show.The problems are likely to continueThe current woes are hitting the balance sheet hard. Moody’s, the US credit agency, has cut Rolls-Royce’s rating to that of junk. It expects “substantial” cash outflows as the engine-maker takes a hit from the coronavirus pandemic. Moody’s cut the long-term senior unsecured rating of Rolls-Royce to Ba2 from Baa3 and maintained a ‘negative’ outlook.This will make it harder and more expensive to raise capital. Coinciding with reduced revenues and ongoing uncertainty in its key markets I think the Rolls-Royce share price could continue to be squeezed. And with little demand for the shares in the current environment, I think they could fall further.That makes them too risky for me. Indeed according to two funds are shorting the shares and this also concerns me.There could be a turnaround down the line, but for the time being, the Rolls-Royce share price doesn’t appeal to me. The aviation industry is unlikely to improve soon so I see no reason why the shares will be any different. Any bad news on the covid front could really stick the knife in and see the share tank. Simply click below to discover how you can take advantage of this.center_img Our 6 ‘Best Buys Now’ Shares Andy Ross owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. The Rolls-Royce share price is down over 60%. Should you buy in now? Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. See all posts by Andy Rosslast_img

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