Deliveroo Share Price: Buy the Dip or Sell the Rip?

The Deliveroo share price has collapsed in the past few days. The ROO stock is trading at 213p, which is about 47% below its all-time high. It has declined in the past ten straight days and is hovering near its all-time low. 

Deliveroo has had a rough year. The once high-flying Amazon-backed company was among the most recognizable names in London. This changed when the company delivered the worst London Initial Public Offering (IPO) this year. 

The sharp decline after the IPO was mostly because of the company’s share structure that gave significant power to insiders. There were also concerns about the company’s growth as the UK economy reopened. Also, legal issues had a role in dragging the shares down.

Still, Deliveroo proved investors wrong in the third quarter. The firm won a lawsuit in London about how its riders were classified. It also announced strong results and boosted its forward guidance. These positive signs helped the ROO share price jump by more than 25% between October and November. 

Recently, however, the company has struggled as institutional investors continue staying on the sidelines. Also, there have been concerns about the rising wages in the UK and worker shortage.

Deliveroo share price forecast

The daily chart shows that the Deliveroo stock price has dropped in 16 of the past 18 days. This drop has pushed its stock to an all-time low and its total market cap to about 3.7 billion pounds. The stock remains below the 25-day and 50-day moving averages (MA).  

The MACD and the Relative Strength Index (RSI) have also declined. It is also below the key level at 265p. Therefore, there is a likelihood that the ROO share price will continue falling this year as sellers exit. Still, a rebound cannot be ruled out for 2022 as investors buy the dips.