Deliveroo shares trading at 256.8p
Deliveroo (LON:ROO) is expecting its current rate of growth to slowdown as the easing of lockdown restrictions comes into effect, while the food delivery company could not say by how much its sales will be impacted.
The recently listed firm conceded that it was difficulty to say how much its recent performance was a result of “special circumstances”.
The company said on Thursday via a trading statement that its current situation remains uncertain and could remain that way as it unclear precisely how lockdowns will be lifted.
Following its stock market debut at the end of March, when its share price slumped by 30%, Deliveroo is now trading at 256.8p per share.
“Troubled investors who backed Deliveroo at its IPO will have been keeping their fingers crossed for a bit of kangaroo action with the share price following its latest trading update. Alas there is no hopping forward on this news, despite impressive growth figures,” says Russ Mould, investment director at AJ Bell.
“Chief executive Will Shu has thrown cold water over earnings expectations, taking a cautious view because the company doesn’t know how easing of lockdown restrictions will affect trading,” Mould added.
Mould argues that there are two ways of viewing Deliveroo’s current predicament:
First, Deliveroo could see a drop in demand as more people are able to get out and about, particularly going out for meals rather than sitting at home waiting for the food delivery driver to arrive.”
“Second, the company has no doubt been told by its advisers that it is better to under-promise and over-deliver in the first year as a listed company. Deliveroo’s reputation has already been shattered because of the big share price drop straight after listing. It doesn’t want to risk another slump by being too aggressive with earnings guidance and failing to meet it,” Mould continued.
“We have a lot of work ahead of us to both grow the business over the long term, and to prove ourselves to the markets,” chief executive Will Shu was reported as saying by Reuters.
In Q1 to March 31, its orders soared by 114% to 71m with GTV up 130% £1.65bn from the year before.
Deliveroo also grew its monthly active customer base by 91% to 7.1m compared to the same period a year ago.