London, UK - April 6, 2019: Deliveroo delivery driver on a street in East London. Deliveroo is a British-born company that enables food to be delivered from restaurants that do not offer delivery.
The Deliveroo share price shrugged the recent partnership between Amazon and the company. The ROO stock is trading at 328p, which is about 17% below its all-time high.
Deliveroo is a fast-growing technology company that is in the food delivery business. The firm counts Amazon as a leading investor.
In the past few months, the company has been trying to expand in other industries in a bid to diversify its business. Recently, it announced a deal with Boots, a leading pharmaceutical company that is part of the Walgreens-Boots Alliance.
And this week, Deliveroo announced that it had teamed with Amazon in the UK. The new deal will see the company deliver some of its orders made by Amazon Prime customers.
By paying a standard fee to Amazon, these customers will be able to have a year of unlimited free deliveries on Deliveroo orders from restaurants and groceries.
Still, there have been concerns about Amazon’s investment into Deliveroo. Some players have complained that the two firms would present an unfair advantage over companies like Just Eat Takeaway and Uber Eats. Still, the regulator said that the collaboration would not present a substantial enough risk to warrant intervention.
Deliveroo, like other companies, is facing the challenge of higher costs. In the past few months, the company, together with ride-hailing companies like Uber, have been forced to raise prices because of the ongoing labour shortages. Some analysts believe that the company will see a slowing growth as the country reopens.
The four-hour chart shows that the Deliveroo share price has been under pressure lately. The stock has managed to drop from its year-to-date high of almost 400p to the current 328p. This pullback is understandable since asset prices tend to drop after hitting a key level of resistance.
The stock has also formed a descending channel that is shown in red and moved below the 38.2% Fibonacci retracement level. It has also declined below the 25-day and 50-day moving averages while the MACD indicator has moved below the neutral level.
Therefore, while the path of the least resistance is to the downside, there is a possibility that the stock will rebound in the fourth quarter of the year. However, for now, the next key support to watch will be at the 50% retracement level at 310p.