Delivery Hero briefly slipped below its IPO price for the first time since 2017 after a relentless sell-off this year wiped out nearly three-quarters of its market value.
The grocery delivery stock has plummeted this year, shedding about $20 billion of its market value, as investors question the company’s path to profitability amid rising borrowing costs.
European competitors have also endured a rough patch, with Just Eat Takeaway plummeting 62 percent and Deliveroo 59 percent.
Delivery Hero shares fell as much as 2.7 percent to a record low of €24.96 before reversing losses on Tuesday, falling below the IPO price of €25.50 for the first time in five years. The stock is also the worst performer of the Stoxx 600 index in 2022.
Around this time last year, the food delivery industry was still on a pandemic-driven demand boom.
That optimism collapsed as economies reopened. Fierce competition and inflation are weighing on already tight budgets and putting pressure on a sector that is yet to turn a profit. Rising interest rates and a broader rotation out of high-growth stocks didn’t help.
Inflation is also hitting consumers’ wallets.
Plunging sales continue to fuel fierce competition for market share in Europe, with fast food delivery the latest battleground as startups like Getir and Gorillas join the fray.
“Obviously inflationary headwinds have been building, but they’re getting worse,” Berenberg analyst Sarah Simon said in a phone interview.
Ms Simon cited Tuesday’s data from Barclays which showed growth in consumer card spending on takeaways in the UK slowed in April.
Disclosure concerns weigh heavily on Delivery Hero stock. The company failed to report order numbers in the first quarter after focusing on profitability rather than volume.
Certainly the sector should have bottomed out with this year’s losses. And the industry’s renewed focus on breaking even is being welcomed by the market.
Delivery Hero, of which Niklas Ostberg is CEO, said last month that it expects to next achieve an adjusted profitability ratio for the first time
Nonetheless, Ms Simon said investors may remain on the sidelines before the company hits its profit target.
“We want to see those numbers before we actually invest based on them,” she said. “It’s not about what could happen. It happened.”
https://www.independent.ie/business/world/delivery-hero-joins-growing-rout-of-e-commerce-stocks-41637184.html Delivery Hero joins the growing roster of e-commerce stocks