Deliveroo share price crashed to a record low this week as the company’s performance moved from bad to worse. It dropped to a low of 76.36p, which was its all-time low, meaning that it has fallen by more than 80% from its all-time high. The stock has crashed by 61% this year alone, meaning that it has underperformed the FTSE 100 and FTSE 250. Its market cap has fallen to about 1.7 billion pounds.
Growth concerns remain
Deliveroo is a leading company backed by the likes of Amazon that provides food delivery services in the UK. The firm went public in 2021, in which was the biggest IPOs in London for years. Since then, the shares have had a difficult time as investors worry about the various parts of the food delivery market. Indeed, shares of most companies in the sector like Just Eat Takeaway and Uber have all dropped by double-digits in the past few months.
The most recent results show that the company’s gross transaction value (GTV) rose by 7% in the first half of the year while revenue jumped by 12%. In its statement, the company warned that its business was slowing in the second quarter as it reiterated its full-year guidance. It expects that its GTV will grow by between 4 and 12%.
Deliveroo faces more challenges as UK inflation is expected to hit 13% in the coming months. With the sterling crashing, analysts believe that consumers will cut their takeaway eating. Some analysts, especially those at Goldman Sachs believe that the country’s inflation will rise to over 20%. Therefore, it will not be a surprise if Deliveroo fails to meet its targets for the year.
Deliveroo share price forecast
The four-hour chart shows that the ROO share price has been in a strong downward trend in the past few weeks. In this period, the stock was trading between the support and resistance levels at 78p and 102p. This week, the stock managed to move below that important support level. It has also moved below all moving averages, as would be expected.
Therefore, by making that bearish breakout, it means that bears have prevailed and the stock will continue falling in the coming weeks. If this happens, we can’t rule out a situation where the shares crash to the next psychological level at 50. A move above 80p will invalidate the bearish view.
