Earnings headwinds take Delivery Hero to $43. What does the future hold?

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Delivery Hero SE (ETR:DHER) shares tanked more than 30% when it reported the fourth-quarter results earlier this month. Since then, the stock has been on a free fall and is settling at $43.

Following the decline, CEO Niklas Ostberg apologized to shareholders, insisting that the company’s strategy would pay off.

The decline in the shares of Delivery Hero reflects investors’ dwindling patience on when the company will make its first adjusted profit. In particular, the stock was dampened by guidance that its core profit margin will range from -1% to -1.2% in FY22.

Delivery Hero’s expected 44 billion euros and 45 billion euros in FY22 also missed projections of 48 billion euros. The GMV had risen by 62% to 35.4 billion euros in FY21 from FY20. At the current trading of $43, Delivery Hero stock is oversold, but will it start a bullish reversal?

Oversold DHER finds support at $43 

Source – TradingView

Delivery Hero appears to be oversold on the weekly chart, with the RSI reading at around 26. The stock is also holding strong at $43. Clearly, the stock may rise from the current level, coinciding with the oversold conditions and support.

Nonetheless, investors are still mindful of the company’s low guidance and unfolding crisis in Europe. Thus, Delivery Hero could take longer before witnessing a bullish impetus. The stock may consolidate at the current level before rising again, making a marginal drop to up to $37 possible. 

Concluding thoughts

Delivery Hero holds strong at $43, with technical indicators showing oversold conditions. The stock could still slip further in a period of consolidation as weak sentiment prevails.

At the current price, Delivery Hero is a hold as it is yet to display strong fundamentals for a buy rating.

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