The Motley Fool

Where will the Deliveroo share price go in 2022?

A Deliveroo rider cycles in London
Image: Deliveroo

After shocking investors with one of the worst IPOs in the history of the London Stock Exchange, the Deliveroo (LSE: ROO) share price is now back in favour with the market. It recently recovered its IPO losses, and even surpassed its initial offering price.

However, I think the real challenge for the stock will come in 2022. At could turn into a make-or-break year for the enterprise. 

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story. In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

A make-or-break year for the Deliveroo share price

Whenever I’ve covered the company in the past, I’ve always tried to point out that the group experienced windfall sales growth last year. But that may not last. Stuck-at-home-consumers had no choice but to order from delivery platforms. There was never a guarantee this would continue. 

However, initial indications show that consumers have continued to use meal delivery platforms like Deliveroo as the economy’s reopened. And these figures have buoyed the share price.

Nonetheless, I reckon the big challenge will come next year. So far, the company’s sales have continued to grow, but it’ll be fighting against very strong historical sales figures next year.

For the second quarter of 2021, Deliveroo reported a 76% increase in transactional volumes on its platform. For the full year, management is forecasting growth of between 50% and 60%.

After two years of explosive growth (2020 and 2021), I think it’s unlikely the company will be able to repeat this performance in 2022. It may face other challenges as well.

Wages are rising in the hospitality sector, and Deliveroo might not be able to retain enough workers if it can’t match pay elsewhere.

And then there’s the challenge of working against the backdrop of the reopened economy. When all of the company’s fees are included, a Deliveroo meal is already significantly more expensive than ordering from a restaurant directly. If it has to increase costs to compensate for higher wages, consumers may seek out other options. 

Favourable backdrop

Still, despite these challenges, the Deliveroo share price has some tailwinds working in its favour. The pandemic really opened up the meal delivery sector to a lot of consumers. And the potential for repeat business is tremendous. 

Deliveroo has also recently inked several agreements with other firms to deliver groceries and other goods. This gives it an albeit slender advantage over competitors. 

Overall, I think the Deliveroo share price will hit some turbulence in 2022. However, I don’t think these issues will cause the value of the company to drop significantly. But nor do I believe it’ll repeat the performance of the past few weeks. 

Despite this mixed outlook, I’d buy a speculative position in the corporation for my portfolio as a long-term investment. As the company continues to develop and grow its offer, I believe it has substantial long-run potential. 

Inflation Is Coming: 3 Shares To Try And Hedge Against Rising Prices

Make no mistake… inflation is coming.

Some people are running scared, but there’s one thing we believe we should avoid doing at all costs when inflation hits… and that’s doing nothing.

Money that just sits in the bank can often lose value each and every year. But to savvy savers and investors, where to consider putting their money is the million-dollar question.

That’s why we’ve put together a brand-new special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation…

…because no matter what the economy is doing, a savvy investor will want their money working for them, inflation or not!

Best of all, we’re giving this report away completely FREE today!

Simply click here, enter your email address, and we’ll send it to you right away.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.