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Here’s Why Rolls-Royce Share Price Fell 10%

Practice Stock Trading
Updated: 01 October 2020

Shares of Rolls-Royce Holdings PLC (LON: RR.) fell 10% today after the company confirmed plans to raise a total of 5 billion pounds to improve its balance sheet.

“The capital raise announced today improves our resilience to navigate the current uncertain operating environment,” Chief Executive Warren East said on Thursday.

The amount of 2 billion pounds is expected to come from its shareholders. Shares fell as initial media reports were centered around a 3 billion pound capital raise.

The company registered cash outflows of 4 billion pounds this year. The plan is to return to profit during the second half of next year.

Rolls-Royce, one of the world’s largest engine makers, is paid based on the number of hours its engines fly. The rights issue will be a major point at the shareholders’ general meeting scheduled for October 27.

Rolls-Royce stock price fell 10% on capital raise October 2020

Given that the international travel industry collapsed amid the pandemic, shares fell to 17-year lows. Rolls-Royce share price fell over 46% in September.

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