Deliveroo share price retreated to the lowest level since November 10 after the company shattered its Australian subsidiary. It dropped to a low of 92p, which was almost 12% below the highest level this month. This price is about 27% above the lowest level this year.
Deliveroo exits Australia
Deliveroo stock price pulled back by more than 7% after the firm exited the Australian market. In a statement, the company attributed this exit to the weak performance in the country and strong competition from the likes of Uber Eats and DoorDash.
The decision came at a time when Deliveroo is going through a rough patch as inflation in the UK rises. Data published this week showed that the headline consumer inflation jumped to the highest point in 40 years in October. High inflation and low wages leads to weak performance for companies like Deliveroo.
Deliveroo is also operating in a difficult place for UK companies. Recently, Made.com an online furniture retailer moved into administration. And this week, Joules collapsed as it blamed inflation, low sales, and high-interest rates for its woes.
Last month, Deliverooo said that its gross transaction value (GTV) rose by 8% in the third quarter. Its GTV rose to 1.72 billion pounds even as the number of orders slipped from 73.6 million in Q3’21 to 23.4 million in Q3’22.
In its international division, where Australia belonged, the number of orders dropped from 37.8 million to 35.1 million while the GTV rose from 721 million pounds to 758 million pounds. Its international market also includes places like France, Hong Kong, and the Netherlands.
Some analysts believe that exiting the Australian market will help the company save money since it was relatively unprofitable. They believe that the firm should consider exiting other markets where it is unprofitable.
Deliveroo share price forecast
The four-hour chart shows that the ROO stock price has been in a bullish trend in the past few weeks. This performance has seen the stock rise from 72.60p on October 14 to a month-to-date high of 104.p. It then pulled back on Wednesday after the company exited the Australian market. As it crashed, it moved below the important support level at 98.15p, the highest level on September 16.
The stock retested the important support shown in an ascending trendline. Therefore, there is a likelihood that it will resume the bullish trend as buyers target the key resistance level at 98.15p A drop below the support at 90p will invalidate the bullish view.
