On Wednesday 13 October, Just Eat will release an update on the third quarter. This is an important moment, as the share with a minus of 30% this year is the worst performer within the AEX stock exchange.
The course of Just Eat Takeaway.com so it’s under pressure. The strong negative momentum is clearly visible in the graph below. Investors gave the stock over the past year a new punishment with a deeper bottom after each upswing.
The reason is logical with knowledge afterwards: the pandemic is coming to an end and the competition in meal delivery turned out to be murderous. The deliverers are in a situation where it is important for them to achieve scale. Growth therefore comes before profitability. Just Eat is somewhat behind its peers in this area, but it already has a good position in a number of countries, including the Germany and the UK. Nevertheless, the whole sector has performed poorly, but Just Eat has been a glimmer of weakness.
The most important Number Just Eat is about sales and order growth. It will be interesting whether Just Eat will adjust its own forecast of order growth for the year. This is now ‘ above 45%’. Analysts are now close to that with 851mln orders for 2021. However, this forecast does imply a substantial reduction in the growth in the number of orders in the second half of the year. Because of the predicted 851mln is 412mln achieved, thus we have 440mln in the second half of the year. We estimate that about 210mln of this should fall in the last quarter. Mind you, that does not include Grubhub (US).
In Google Trends in the UK, the search term ‘Just Eat’ declined by around 5% in September compared to the summer. This decline seems reasonably foreseeable, but it does not indicate a strong performance. In the Netherlands we see a downright weak September. In our view, there is probably no possibility of an increase in guidance.
One notorious problem of Just Eat is its position in the US. It has the greatest difficulty to defend its market share against Uber Eats and Dodash. On top of that, in the most important city for Just Eat in the US, New York, there may be a permanent ceiling on the platform fee of 5% of the order. In addition, the CEO and co-founder of Grubhub will leave the company. There may be many reasons for this, but it is not a sign of a smooth growth engine.
The market share of Grubhub / Just Eat in the US is illustrated by the image below.