Deliveroo Share Price is Range-Bound. Is ROO a Good Buy?

Summary:
• Deliveroo share price remained in a tight range as investors reflected on the latest earnings report. The stock is trading at 96.80p,

Deliveroo share price remained in a tight range as investors reflected on the latest earnings report. The stock is trading at 96.80p, where it has been in the past few days. This price is about 75% below its all-time high, valuing the company at about 1.75 billion pounds. Other food delivery stocks like Just Eat and Hello Fresh have all crashed recently.

Deliveroo is facing challenges

The Deliveroo share price has been under intense pressure in the past few months as the business environment worsens. Results published this week showed that the company’s growth has stalled as consumers continue to face headwinds.

In total, the company’s gross transaction volume rose by 7% while revenue rose by 12%. Its gross profit rose by 16%. According to the management, the firm’s GTV rose by 12% in Q1 and then pulled back in Q2. They then reiterated their full-year guidance in which they expect that GTV will rise by between 4% and 12%. 

Deliveroo has over 7,8 million monthly active users and over 180k riders. In total, its revenue in the first half of the year rose by 12% to 1.01 billion pounds while its loss before tax was over 147 million pounds. Therefore, there are worries about when the company will become profitable. The company’s CEO said:

“So I’m especially pleased that we achieved our financial progress while also continuing to improve our consumer value proposition, adding selection across our restaurant, grocery, and non-food categories, with brands like McDonald’s, WHSmith, ASDA, Auchan, Esselunga, and ParknShop. “

Deliveroo share price forecast

The ROO share price did well after the company’s published results this week. On the daily chart, we see that the shares have formed a horizontal channel that is shown in green. At the same time, the stock is hovering at the 25-day and 50-day moving averages while the MACD has moved to the neutral point.

Therefore, Deliveroo is not out of the woods yet and there is a likelihood that it will resume the downward trend. If this happens, the next key support to watch will be the lower side of the channel at 78p. A move above the resistance point at 103p will invalidate the bearish view.