Deliveroo share price forecast as profits remain elusive

Deliveroo (LON: ROO) share price moved sideways after the company posted another big annual loss. The stock was trading at 89.62p, which was a few points below this week’s high of 95.75p. It remains about 77% below its all-time high of 397.50p. 

Deliveroo earnings review

Deliveroo annual results published on Thursday showed that the company had a mixed performance in 2022. Its Gross Transaction Value (GTV) jumped from £6.304 billion in 2021 to over £6.84 billion in 2022. This GTV value helped it to grow its revenue to over £1.97 billion and its gross profit to over £643 million. 

However, the rising cost of living pushed the company to make another annual loss. Its total loss £330 million to £294.1 million. Its free cash outflow increased £243 million. On its balance sheet, the company has over £1 billion in cash, which helped it increase its share repurchase program.

The biggest concern for Deliveroo is that its path for profitability remains rocky going forward even as its management remains hopeful. In a statement, the CEO, Will Shu, said:

“ I’m particularly pleased that the Company reached adjusted EBITDA profitability in the second half of last year. This is a significant step on our path to sustainable cash generation, and we achieved this milestone a year earlier than our guidance.”

Deliveroo has changed how it does business in the past few months. For one, it has exited some of its key markets like Australia and the Netherlands. It has also launched in Qatar, where it hopes to gain market share. At the same time, like other tech companies, it is actively laying off staff as part of its strategy to cut costs and focus on profitability. In a note, an analyst told Bloomberg:

“As delivery prices are already dissuading some orders, Deliveroo depends on steady demand from a core base, which is skewed toward the more affluent in contrast with Just Eat.”

Deliveroo share price forecast

ROO stock chart by TradingView

Deliveroo stock has been dead money for investors since going public. Since May 2022, the stock has remained between the support and resistance levels at 78.26p and 106.08p. It has also continued consolidating at the 25-day and 50-day exponential moving averages while the Average Directional Index (ADX) has slipped.

Therefore, the outlook for Deliveroo is neutral at this stage. A bullish breakout will be confirmed if it moves above the key resistance at 106 while a bearish breakout will be confirmed if it drops below 78.26p.