Deliveroo plc; Can Deliveroo plc’s advertising revenue bring it back to the brink?

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The underlying position of Deliveroo PLC (LSE:ROO) remains a mystery ahead of its third quarter earnings call on Friday, October 21.

The London-listed food delivery disruptor has been quiet enough, but there’s reason to suspect all is not well.

Shares have fallen more than 60% as the company battles reduced demand due to a post-pandemic hangover.

Additionally, the gig economy is facing a reckoning in the US, but there is no shortage of court cases in the UK either.

Danni Nelson, financial analyst at AJ Bell, noted that concerns about the gig worker model among institutional investors contributed to Deliveroo’s disastrous IPO last year.

“Changing the classification of workers will likely cost businesses more, and right now they will struggle to pass those extra costs on to their customers who are already thinking hard about their day-to-day expenses,” Nelson said.

But Deliveroo has an ace up its sleeve with its new “The Deliveroo Media and Ecommerce” platform, a fancy title for in-app ads.

“Advertising revenue is just a small part of Deliveroo’s current model, but a big opportunity and leverage the business can leverage to grow its bottom line,” chief executive Eric French said in June.

Next Friday’s results should give us an idea of ​​leverage’s true potential.

As for the broader guidance, few words are emerging from equity analysts, likely due to the fact that Deliveroo’s financial situation remains highly speculative.

The company’s medium-term gross transaction value (GTV) growth rate is expected to be between 20-25% per year.

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