Deliveroo share price is in the spotlight a day after it dropped by more than 30% following its debut in London. The ROO stock has dropped for the second consecutive day and is trading at 286p.
What happened: Deliveroo had one of the worst public debuts in recent years. While it was the biggest London IPO since 2012, it was also the worst performer. Its stock dropped by more than 30%, erasing more than 2.7 billion pounds worth of value.
This decline was mostly because investors are worried about the company’s share structure, where the CEO has a 50% voting power. This saw some of the biggest London investors like Legal & General and Aberdeen Life shun the firm.
As a gig company, there are concerns about the future of its business model. Furthermore, London has been relatively critical of companies like Uber.
Most importantly, there are concerns about its business model now that the UK is reopening its economy following a successful rollout of the vaccine. Also, investors are concerned about the competition in the industry. Indeed, earlier today, Glovo, a competitor, raised more than $528 million from investors.
As shown below, there is nothing much to write about Deliveroo share price from a technical standpoint. Still, it is slightly above yesterday’s low of 277p. In my view, the stock will likely rebound in the longer term as investors rush to buy the dips.
Also, as a market leader in the industry, Deliveroo will always have an edge against its competitors. Furthermore, companies like Just Eat Takeaway and Uber have done relatively well recently. However, there could be some volatility in the near term.
