Investor appetite drops for Just Eat

Investors took a bite out of Just Eat Takeaway’s share price after the group’s performance in the third quarter fell short of expectations amid a bigger-than-expected decline in orders in North America.
Shares in the Amsterdam-based company, Europe’s largest food delivery group, fell 90p, or 8.7 per cent, to 944p after it said that it received a total of 211.1 million orders in the three months to the end of September, fewer than the 214.2 million analysts had expected.
The company’s total gross transaction value (GTV), the total value of all goods sold including North America, fell 3 per cent to €6.34 billion.
Orders fell across all markets including in northern Europe, where it recorded two million orders fewer than analysts expected, while the number of orders in the UK and Ireland dipped by 1 per cent in the quarter to 60.1 million. However both markets, which now account for about 60 per cent of the group’s total orders, reported a respective 4 per cent and 6 per cent increase in GTV over the period.
Management remains confident that its GTV, excluding North America, will increase by between 2 per cent and 6 per cent this year and it will deliver adjusted underlying profits of €450 million.
However, its fortunes worsened in North America, where the company is trying to find buyers for its Grubhub business. The number of orders it received in the region dropped by 11 per cent to 66.8 million, while the gross transaction value fell 12 per cent to €2.1 billion. This means that in the year to date, orders in North America are down 9 per cent to 215.9 million.
Giles Thorne, an analyst at Jefferies, said the trading update “paints a picture of difficult trading”, while Deutsche Bank noted that the third quarter is “typically the softer quarter of the year due to seasonality.”
Jitse Groen, its chief executive, said the company “made good progress across our key strategic pillars, which we believe will drive growth”.
“Furthermore, cost and operational efficiencies have allowed us to increase investments while maintaining our outlook,” he said, adding that the group is “well on track to deliver our guidance for the full year.”
Just Eat was formed in February 2020 through the £10 billion merger of Just Eat and Takeaway.com, its Dutch rival. Just Eat was launched in Kolding, Denmark, in 2001, entering the British market in 2006 and was floated on the London Stock Exchange in 2014. Takeaway.com was founded in 2000 by Groen.
The group has its headquarters in Amsterdam and operations in countries including Germany, Canada, Australia, France, Spain and Israel.
The company agreed to buy Grubhub for €7.4 billion in the summer of 2020, but under pressure from activist investors, it put Grubhub up for sale after only a year after the company’s total value fell below the figure it paid for the business. Cat Rock Capital Management, one of its biggest shareholders, has said the sale of the business would deal with Just Eat’s “deep and damaging” undervaluation.