During the first quarter of 2022, Delivery Hero, Just Eat and Deliveroo lost 22 billion euros on the stock markets. In Europe, investors are concerned about the profitability of these companies who still favor growth, despite the rise in costs and while they have still not made a profit.
Delivery Hero loses 59% of its stock market value
The food delivery market has been plagued by many concerns for the past few weeks. This instability is linked to rising interest rates and galloping inflation. These two factors had an immediate effect on investors who chose to avoid European meal delivery companies. Experts believe they are put off by their heavy losses and endless quest for profitability. As a result, shares of Delivery Hero plunged 59% in the first quarter of the year, when those of Just Eat and Deliveroo fell around 35%.
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The three food delivery companies lost 22 billion euros in market value. This is proof that in times of instability, especially because of the Russian invasion of Ukraine, the markets are able to impose sanctions on companies that favor growth, despite the fact that they are not profitable. . This is the whole problem of these three companies. Their fear of losing market share led to higher spending, even as falling stock valuations signaled investor disapproval.
Rising inflation is impacting food delivery companies
Just Eat launched on the British market in December, when Delivery Hero made the choice to buy a majority stake in Glovo (which values the Spanish company at 2.3 billion euros), while first Weak signals of rising inflation were noticeable. An HSBC analyst said that “This Glovo operation continues to baffle us”. Delivery Hero even expects Glovo to post a loss of 330 million euros in 2022. The volatility of stocks of food delivery companies will remain high until the sector is able to be profitable.
At the start of the year, it must be recognized that European food delivery players are facing immense challenges. Inflation squeezes consumer budgets, while competition is fiercer than ever. We are seeing the arrival of new start-ups like Getir or Gorillas which are launching into the rapid delivery of food products. In addition, the very strong growth achieved in 2020 and 2021 will be difficult to repeat now that the peak in sales generated by the pandemic has passed. However, the first days of the second quarter are encouraging: shares of Just Eat are up 7%, those of Delivery Hero 6.4% and those of Deliveroo 2.1%.