The Deliveroo share price sell-off is accelerating. The ROO stock has tumbled by more than 265 from its highest level in September. It has even tumbled in the past four straight days and is trading at the lowest level since july.
ROO diversifying its business
Deliveroo is best known for its food delivery business, which is its bread and butter. In the past few months, the company has inked deals with several companies as it seeks to diversify its business. It is currently delivering products for Boots, the company owned by Walgreens. It also delivers groceries for companies like Waitrose, Sainsbury’s, and Aldi.
And this week, the company announced a new deal with Wm Morrison, the well-known UK retailer that will be auctioned on Saturday. The company is building a dark store in London known as Deliveroo Hop. The store will help it deliver products within 10 to 15 minutes.
By launching Deliveroo Hop, the company will make its first move into becoming a retailer itself. In this agreement, Morrisons will become a wholesaler. The firm hopes to increase its non-food revenue to more than 7%.
Deliveroo share price forecast
In my note on Deliveroo last week, I noted that the share price had moved into a bear territory in the past few days. A stock is considered to be in a bear zone after it drops by more than 20% from its highest point. Sadly, the situation has worsened, with the shares falling to the 61.8% Fibonacci retracement level. At the same time, it has dropped below the 25-day and 50-day moving averages.
Therefore, while the stock will likely keep falling in the near term, there is a possibility that some investors will rush to buy the dip in October. Besides, the stock is substantially oversold.