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.
“There are two ways of looking at this situation. 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.”