Delivery stocks struggling in wake of pandemic
The food-delivery stock has struggled this year, shedding about €18.1bn of its market value as investors question the company’s path to profitability amid rising borrowing costs.
European delivery services have also hit a rough patch, with Just Eat Takeaway plunging 62% and Deliveroo down 59%.
Delivery Hero shares dropped as much as 2.7% to a record low of €24.96 before reversing losses on Tuesday, dipping below the IPO price of €25.50 for the first time in five years. The stock is also the Stoxx 600 Index’s worst performer in 2022.
This time last year, the food-delivery industry was still riding high on a pandemic-fuelled boom in demand, but reality bit as economies reopened.
Relentless competition and inflation have squeezed already tight budgets, pressuring a sector that has yet to turn a profit. Rising interest rates and a broader rotation out of high growth stocks didn’t help. Inflation is also hitting consumer wallets.
Sagging sales are adding further fuel to the heated competition for market share in Europe, with rapid grocery delivery the latest battleground as startups like Getir and Gorillas push into the fray.
“Inflationary headwinds have been building, obviously, but they’re getting worse,” Berenberg analyst Sarah Simon said.
Data from Barclays shows that growth of consumer card spending on food takeaways slowed in the UK in April.
Disclosure concerns are weighing heavily on Delivery Hero’s stock. The company failed to break out order numbers in the first quarter after shifting to focus on profitability rather than volume.