What’s Going On Here?Food delivery app Deliveroo raised its revenue growth forecast on Thursday – but it wasn’t enough to stop investors throwing its stock on the barbie. What Does This Mean?Doorbell dining has been one of the biggest winners of the pandemic, with would-be eater-outers forced to eat in instead. But as restaurant restrictions recede, so too has Deliveroo’s growth. While gross transaction value, a.k.a. GTV – the total amount of customer spending in the company’s app – rose 130% in the first quarter of 2021 compared to 2020, it was just 76% higher in the second quarter.
Investors had been expecting that growth to slow further still – but Deliveroo’s latest figures suggest things won’t be as bad as thought. The firm now anticipates GTV to be 50-60% higher than last year across the whole of 2021, up from previous forecasts of 30-40%. That positive update initially sent Deliveroo’s beleaguered share price up 5% on Thursday – before broader market declines helped drag it back down into negative territory. Why Should I Care?The bigger picture: Apples and oranges.
GTV growth is one thing, but profitability is another – and Deliveroo also warned extra investment in unspecified “growth opportunities” would hurt its profit margin this year. It’s previously shown interest in setting up more takeout-only kitchens, as well as grocery delivery partnerships with major supermarket chains. While investors may balk at the expenditure involved, Deliveroo’s controversial dual-class share structure means the company’s executives can press ahead regardless.
Zooming out: Dim sums.
Deliveroo’s share structure was one reason its initial public offering (IPO) flopped – and its shares remain stubbornly below their opening-day price. But Chinese IPOs on US stock exchanges are flopping for a different reason: the Chinese government is cracking down further on overseas listings, just days after it hit Didi with a blindside that sent the ride-hailing firm’s shares down 20% from its own IPO price. | 
