The Deliveroo share price is struggling as the food delivery company continues struggling as a public firm. The stock is trading at248p, which is 8.4% below its highest level last week. The shares are down by more than 35% from their all-time high.
What happened: Deliveroo is a technology company that facilitates food and grocery delivery mostly in the United Kingdom. The firm had the most publicised initial public offering this year. Before the IPO, the company was valued at more than $8 billion. Today, it has a market cap of more than 4.7 billion pounds.
The stock has struggled since it went public. There are three primary reasons for that. First, many large institutional investors shunned the company because of its shareholding structure. The CEO and founder simply had too much power. In fact, many companies like Standard Life Aberdeen and Legal & General refused to participate in the IPO.
Second, there are concerns about the company’s business model. There have been some concerns about why Deliveroo riders should be considered employees or contractors. If they are seen as employees, the company’s business model will be significantly affected.
Third, Deliveroo share price has struggled because of worries about growth. While the firm has done well during the pandemic, there are worries about whether it will be able to sustain this growth in the future. Finally, recently, the technology sector has struggled as investors start pricing in higher interest rates.
The 30-minute chart shows that the ROO share price found a substantial resistance at 270p. It then formed what looks like a combination of a rounded top and a rectangle pattern. The stock broke out below the channel on May 7. The shares have also recently formed a bearish flag pattern that is usually a bullish sign. It has also moved below the 25-day and 50-day moving averages (MA).
Therefore, in my view, the path of least resistance for the stock is lower. If this happens, the next level to watch is 242p, which is along the 61.8% retracement level. However, a move above the 38.2% retracement level at 253p will invalidate this trend.
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