Deliveroo (LON: ROO) shares: Will it be wise to invest now?

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Deliveroo (LON: ROO) shares: Will it be wise to invest now?

 Deliveroo (LON: ROO) shares: Will it be wise to invest now?
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Highlights

  • Deliveroo shares have declined by more than 50% over the past year and some investors are expecting that Deliveroo might even become a penny stock.
  • As per Deliveroo’s recently released Q1 results, the gross transaction value (GTV) of the company has grown by 12% year-on-year.

UK-based online food delivery firm Deliveroo plc (LON: ROO) has been in the news recently after a French court ruled that the company has abused the freelance status of cycle riders working for it. The shares of Deliveroo have declined by more than 50% over the past year and some investors are expecting that Deliveroo might even become a penny stock in the near future if this trend continues.

 The shares of Deliveroo have declined by more than 50% over the past year

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Is Deliveroo approaching penny stock status?

Penny stocks are stocks trading under a market price of £1. With a fall of over 47% in 2022, Deliveroo shares have been approaching the status of penny stocks, as per analysts. As per Deliveroo’s recently released Q1 results, the gross transaction value (GTV) of the company has grown by 12% year-on-year.

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This performance was considered solid as compared to the same period last year when the lockdown forced people to order in rather than go out to eat. Thus, the company has shown decent resilience since it got hit by the pandemic. The company has successfully maintained its annual guidance, and in the second half of 2022, the company aims to grow further, targeting GTV in the range of 15%-25%.

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                               Deliveroo approaching penny stock status

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However, this positive outlook has been shadowed by the rising inflationary pressure, accompanied by soaring costs due to changes in EU rules regarding the rights of gig workers. In general, the investor sentiment has been souring lately due to several reasons, including the Russia-Ukraine crisis, and thus investors are moving away from growth stocks, which has worsened the situation for Deliveroo.

Amid the escalating cost-of-living crisis and falling wages in the UK, Deliveroo has taken a hit. As competition is consistently rising and the resilience of the stock market is falling, shares in Deliveroo may hit rock bottom, falling below £1. However, these are just speculations. Deliveroo is a very popular brand name, but investors should carry out their own analysis before investing in Deliveroo shares.

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Deliveroo’s share price performance

Deliveroo plc, which started trading on London Stock Exchange’s main market just a year ago, has not performed well over the year after its flop IPO. The returns of the company, one-year basis, and year-to-date basis, have been negative as of 20 April 2022, standing at -54.27% and -47.33%, respectively.

The market cap of the company stands at £1,995.92 million as of 20 April 2022. Shares in Deliveroo plc were trading at GBX 110.50, up by 2.27%, at around 1:00 PM (GMT+1) on 20 April 2022.

Tags: Deliveroo, IPO, penny stocks, GTV, French court, gig workers, EU rules

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