Deliveroo Share Price Forecast September 2021 – Time to Buy ROO Stock?

Shares of the British online food delivery platform Deliveroo (LSE: ROO) are in the red today, after closing at 328p on September 15th (19:24 UTC+1). The valuation of the food-delivery giant has increased by 17 per cent in the last year. However, the share price has slowly declined from record peaks of approximately 395p in mid-August to 328p currently. Investors are contemplating if the dip is a probable opportunity to add ROO share in their long-term portfolio or not. Let’s find out!

Deliveroo – Technical Analysis

According to the financial statement from Deliveroo, the market cap of the online food delivery company is at £6.078 billion with total assets worth £1.881 billion. Total revenue for 2020 was at £1.19 billion compared to £771.80 million a year ago.

Moving averages for ROO such as Exponential Moving Average (10)(343.3), Simple Moving Average (10)(346.4), Exponential Moving Average (20)(349.3), and Simple Moving Average (20)(360.5) are pointing towards to selling. Oscillators such as Relative Strength Index (14)(38.8), Stochastic %K (14, 3, 3)(9.4), Average Directional Index (14)(25.8), Awesome Oscillator(−17.3), on the other hand, are neutral.

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Recent Developments

After the company’s IPO in March, the share value of Deliveroo had a rough start. However, thanks to some outstanding trade statistics, it gradually gained traction after that and raised its full-year projection in July. The most recent report indicated an 82 per cent increase in sales from January to June.

The company included additional 10,000 sites in its database in Q2. Deliveroo is also growing its grocery business and just partnered with Boots to distribute an array of beauty and wellness products to customers’ houses. After the Covid-19 breakthrough, Deliveroo’s earnings skyrocketed, as did the overall food delivery service industry. According to experts, the online meal delivery industry in the United Kingdom will be valued at £11.49 billion by 2025, up from £8.02 billion now. According to industry projections, the market will continue to expand at a rapid pace as well.

Deliveroo’s share price soared recently when news broke that a German food delivery company named Delivery Hero had purchased a 5.09 per cent interest in the company. Nevertheless, this international business may be able to assist the share in gaining momentum in its own industry.

Should You Buy Deliveroo shares?

Of course, there are certain advantages, such as Deliveroo’s expansion of partnerships and product lines, such as collaboration with Boots. It’s also expanding into online grocery in the UK and worldwide, indicating that it’s a growing business that’s receptive to new prospects and diversifying into different sectors. As previously stated, Delivery Hero has acquired a share in the company, which might lead to a takeover bid in the future. For shareholders, this might be a win-win situation.

Despite all these positives, there remains some scepticism regarding what keeps Deliveroo unique. Since the necessity of area-wide lockdown is reducing day by day, takeout demand is likely to be expected to fall. Also due to the substantial investment expenditures the company is paying to create its infrastructure, experts believe it will not make consistent revenue until 2024 at the very least. Meanwhile, competition from companies like Just Eat, Uber Eats, and a number of other operators is fierce – imposing a significant challenge to future revenues as well.

Deliveroo, thus in its present condition, does not appear to be a viable long-term investment. As a result, it is safe to treat ROO shares just as a speculative asset for now. With increasing revenue and order quantities, even though the company seems to be on the right course, Deliveroo’s shares will continue to be under stress until the company is able to generate consistent revenue.

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