Deliveroo share price: Mark Hiley predicts 40% drop before bottom hits
The Deliveroo share price is down 16.8% since 31 March, despite recent reports that sales have doubled during the lockdown. With disputes over pay looming large, analyst Mark Hiley believes shares could fall another 40%.
- Deliveroo share price remains bearish
- Analyst projects 40% drop in value
- Company sales up, but pay dispute still a problem
- Want to trade Deliveroo shares? Open an account today
Mark Hiley, the founder of research firm The Analyst, recently told The Mail on Sunday that Deliveroo (ROO.L) shares may not yet have found their bottom. Shares in Deliveroo opened at 238p on 20 April, well down on pre-initial public offering (IPO) expectations. The food delivery company was due to join the London Stock Exchange (LSE) with a share price of between 390p and 460p. However, Deliveroo shares eventually opened at 331p when it was listed on 31 March. From that point, they have been bearish ever since.
How much has the Deliveroo share price fallen?
Even from the pre-IPO guidance of 390p, the Deliveroo share price is down 38.9% based on today’s opening value. Major City firms involved in the Deliveroo IPO are unable to publish research for at least a month. However, financial analyst Hiley believes the bearish trend is far from over.
Hiley commented:
‘We still think the stock could well fall another 40% before it hits bottom. We looked at Deliveroo in January when an IPO was first mooted, and it was obvious then that the company was operating in a highly competitive market and was facing legal challenges to its labour practices on multiple fronts.’
Trade Deliveroo using CFDs with IG now. Create a trading account with us.
What factors are hurting Deliveroo shares?
Sales are not the issue right now. Deliveroo reported a 114% uptick in orders between January and March 2021. This surge in lockdown activity saw total transactions for the first quarter (Q1) top £1.65 billion, compared to £715 million during the same period in 2020.
However, chief executive officer (CEO) Will Shu told the PA news agency last week that growth will ‘decelerate as lockdowns ease’. How quickly orders will drop is unclear, but Shu believes data from other markets is encouraging. In Hong Kong, all lockdown restrictions have been lifted and, according to Shu, there is still ‘really resilient growth’ in the region.
This may mean that activity remains high as England and the rest of the UK emerges from lockdown in June. Although the drop in orders may be a concern, the bigger issue facing Deliveroo is the dispute regarding rider wages. The revelation that some riders can earn as little as £2 caused the Deliveroo share price to open lower than pre-IPO guidance suggested.
A strike on 7 April hasn’t settled the issue, either, something Hiley has based much of his bearish sentiment on. Does this mean Deliveroo shares are set for further problems or can strong sales reverse the current trend?
Can Deliveroo shares rebound?
Take your position on UK shares for just a small initial deposit with CFDs.
Open an account to start trading or investing in UK shares.
Want to learn more about market research and trading? Here are some topics you might be interested in:
- The IG Academy
- How to open a live trading account with us
- Ways to trade online
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
