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Deliveroo cuts revenue guidance as cost-of-living crisis bites

British food delivery unicorn Deliveroo (GB:ROO) has cut its revenue guidance thanks to the cost-of-living crisis, as British consumers cut back on extras such as takeaways. 

Deliveroo said in a statement that its margin guidance remained unchanged and its balance sheet remained strong. 

The company said, “Management is confident in the company’s ability to adapt financially to a rapidly changing macroeconomic environment, through gross margin improvements, more efficient marketing expenditure and tight cost control.”

Deliveroo sales boomed in lockdown

The company said that its gross transaction value (GTV) growth was now expected to be 4-12% as compared to previous guidance of 15% to 25%. 

The company blamed “increased consumer headwinds” in the second quarter. 

The company boomed in lockdown, with 20% GTV growth in 2021, thanks in part to COVID lockdowns boosting demand for home deliveries. 

Shares in the company have lost three-quarters of their value, since listing at 390 pence in March 2021. 

Shares in Deliveroo dipped initially on the news, but at time of writing were more than 5% up.

Deliveroo: the view from the City

According to TipRanks’ analyst rating consensus, Deliveroo’s stock is a Hold. That’s based on five ratings from the analysts, which include one Buy, three Hold and one Sell recommendations.

The average price target of 140.60p implies upside potential of 57.09%. Analyst price targets range from a low of 79p per share to a high of 170p per share.

Conclusion

Deliveroo is facing difficulties sparked by the cost-of-living crisis, and its share price has plunged in recent months. Analyst price targets suggest this company is one to watch. 

Robert Waugh
Robert Waugh is a highly experienced journalist, editor and content producer who has worked for national newspapers in the UK for more than 20 years. Rob has appeared on everything from BBC Breakfast to the Nine O’ Clock News talking about business and technology, and has written on innovative companies and technological breakthroughs for outlets including the Mail on Sunday, the Daily Telegraph, Metro, Vanity Fair and Yahoo News.