Is the Deliveroo share price about to surge?
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- The Deliveroo share price is down 54% since its IPO
- The company continues to expand despite the direction of the share price
- Deliveroo gains market share in its fourth-quarter results
The patience of investors in Deliveroo (LSE:ROO) shares have been tested. This is because the Deliveroo share price is down 54% since its IPO on 31 March 2021. In 2022, the stock is down over 36%. No investor is happy to see red in the portfolio. Even more so when it’s an innovative company like Deliveroo. But is the downturn about to change? Let’s explore.
What does Deliveroo do?
Deliveroo engages in the provision of online food delivery services. It operates majorly in the UK, Ireland and Internationally.
It connects local consumers, restaurants, grocers and riders. The group, which was founded in 2013, works with 160,000 best-loved restaurants and grocery partners with over 180,000 riders to try and provide the best food delivery around the world.
In total, its network expands across 800 locations in 11 markets. In my opinion, that creates massive value for shareholders. However, the Deliveroo share price has suffered considerably over the last few months despite a seemingly strong performance.
Deliveroo share price: what does the numbers say?
Deliveroo recently released its Q4 2021 trading update. The firm had an excellent year of growth in 2021, with full year pro forma gross transaction value (GTV) being up 70%. In the fourth quarter of 2021 GTV growth of 36% (in constant currency) was also reported. Furthermore, the company gained market share in the UK during the period. And Internationally, GTV was equally up 36% year-on-year.
Commenting on the results, Founder and CEO of Deliveroo, Will Shu, said, “We finished 2021 with strong Q4 performance, and our full-year GTV growth of 70% in constant currency was at the top end of the previously-upgraded guidance we provided”.
Considering the challenging nature of the past two years, this performance is very encouraging to me.
Is the Deliveroo share price about to surge?
In my view, the company is continuously making progress. While no one can accurately predict when or if a surge will come, I see the current Deliveroo share price as an opportunity to buy for my portfolio.
Although I am quite positive about the business, I also recognise that the Food delivery service is getting more competitive. Competitions from Just Eat, UberEats and others could affect the market share of Deliveroo, which in turn could impact revenues. In any case, I’d watch the company’s stock closely as I see the current price as a buying opportunity.
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Prosper Ambaka does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.
Originally published at https://themoneycog.com.
