Food Delivery Stocks Lose $24 Billion in Just Three Months (bloomberg.com) 30
In a market gripped by concerns over rising interest rates and soaring inflation, investors are avoiding European food delivery companies, turned off by their steep losses and determined efforts to expand. From a report: Shares in Delivery Hero SE plunged 59% last quarter, the second-worst performance in Europe's Stoxx 600 Index. Peers Just Eat Takeaway.com and Deliveroo Plc dropped more than 35%. The three stocks wiped out a combined $23.7 billion, more than half their market value. While it's no surprise when tech stocks struggle in times of rising borrowing costs, the sharp slump in food delivery shares underscores the penalties markets can impose on companies for prioritizing growth when they are yet to turn a profit.
Companies in the sector have done a bad job of adjusting their strategies to the rising cost of capital, Jefferies analyst Giles Thorne said in an interview. "The cost of capital goes up, you don't make money and you've got debt -- then that's how equity gets crushed." The fear of losing market share has driven increased spending, even as sliding equity valuations signaled investor disapproval. Just Eat expanded into the U.K. grocery delivery market in December, after previously saying the category lacked scale. Delivery Hero agreed to buy a majority stake in Glovo in a transaction that valued the Spanish delivery startup at 2.3 billion euros ($2.5 billion).
Companies in the sector have done a bad job of adjusting their strategies to the rising cost of capital, Jefferies analyst Giles Thorne said in an interview. "The cost of capital goes up, you don't make money and you've got debt -- then that's how equity gets crushed." The fear of losing market share has driven increased spending, even as sliding equity valuations signaled investor disapproval. Just Eat expanded into the U.K. grocery delivery market in December, after previously saying the category lacked scale. Delivery Hero agreed to buy a majority stake in Glovo in a transaction that valued the Spanish delivery startup at 2.3 billion euros ($2.5 billion).
Good. (Score:5, Insightful)
You're on
Or maybe it won't. Maybe I'll wake up one day to find your company is fired you and now you're an independent contractor with no benefits and half the pay.
they want the worker to pay for car to drive for j (Score:2)
they want the worker to pay for car to drive for the job at an rate that does not cover the cost of driving.
Next up with higher and higher employees is make them rent there desks and rent the software they need to do there job.
Just wait for mcdonald to go 1099 in there you must rent your uniform, work for 100% commission so when the store is dead and you are just standing there you make zero to be ready for when someone comes in.
Re:they want the worker to pay for car to drive fo (Score:4, Interesting)
I know someone, older than me by a decade or so, with a master's degree in social work who quit their job from burnout.
They were then convinced by a mostly-overseas boyfriend to buy a new car for them to drive for Doordash - who then disappeared back to Africa.
Now they are the ones driving for DD and think it's great. They also think that BTC is going to make them rich any second. I told them it's a scam and they assured me that they're "a geek" so it's okay.
I'm willing to bet that they did not do any math at all for either of these decisions, and for their next trick they're talking about studying finance. Desperation makes people self-delude and do stupid shit.
People do not make good decisions (Score:2)
Re: (Score:3)
Maybe I'll wake up one day to find your company is fired you and now you're an independent contractor with no benefits and half the pay.
I think we all have to realize that businesses will shed anything that is an unnecessary cost. Workers while touted as being "the most valuable resource" by many companies is lip service. EDS established the principle of "outsourcing" and many of the companies that signed up with them saw lower costs, most of which were paid for by the labor savings of them laying off their staff and EDS rehiring a few at lower cost with fewer benefits. Of course, service levels were lower than what the clients of EDS had w
Re: (Score:2)
Throughout the later part of 20th century worker misclassification was rampant, particularly at tech company. MS paid $100 million. Google won its lawsuit in 2015 paving the way for current tech companies to label anyone as contract.
It is a continued issue that efficiencies brought on by technolo
Right now the plan seems to be (Score:3)
I suppose we could change how our society distributes the productivity from the last 50 years of automation and productivity gains. But what are you going to do, vote for a democrat?
Fun fact. 96% of the jobs created since the 1980s happened under democratic administration
Re: (Score:2)
To what used to be called indentured servitude.
Re: Good. (Score:2)
Re: (Score:2)
No they aren't. They aren't even employing people. Nobody has to work for a gig company, especially not with unemployment being so low. Wages are going up for the working class, not down (albeit not necessarily fast enough to keep up with inflation), and they have been since at least 2019 if not earlier. Employers aren't being transformed by gig work, and workers are (at least for now) experiencing increased ability to pick and choose between prospective employers. Target is paying up to $24/hr to some
Left out covid ending (Score:4, Interesting)
Covid started out with a huge boost to food delivery companies. They literally could NOT fill all the orders they got.
While a few of us still use them (myself included), they have basically lost all that temporary business. It effectively was a pandemic-only success.
I think the loss of that business had more to do with the industries problems than high interest rates.
Everybody always exaggerates the effect of interest rates, particularly the banks that are pushing to control them.
Re: (Score:2)
But what about restaurants in general? Yes the virus gave us a specific health reason to not go, but even beyond that, I feel like prices are sharply up and service is down (long unpredictable waits for example). Even stopping at Subway on a road trip is so expensive now. And for sit-down restaurants, and for delivery, the expected tip keeps going up.
Re: (Score:2)
I think gas prices (food gets transported pretty far) is a large part of it. Tip is going up because nobody wants to work for restaurants and the restaurants do not want to pay them more.
My food delivery experience (Score:2)
Last night someone delivered food to my front door. They didn't knock, or ring the doorbell, and I only found the food the next morning. One stone cold cup of coffee and a fruit salad slowly turning brown.
The trouble is that I didn't order any food. And the food that was delivered had no indication as to where it came from, who delivered it or who it was meant for. I can only assume that it was marked as delivered on some app/website, and who ever delivered it pocketed all the associated fees and just d
Re: (Score:2, Informative)
Last night someone delivered food to my front door. They didn't knock, or ring the doorbell, and I only found the food the next morning. One stone cold cup of coffee and a fruit salad slowly turning brown.
The trouble is that I didn't order any food. And the food that was delivered had no indication as to where it came from, who delivered it or who it was meant for. I can only assume that it was marked as delivered on some app/website, and who ever delivered it pocketed all the associated fees and just dumped the food at the first place they thought was suitable.
But the bigger question remains -- Why does anyone need to have a cup of coffee and a fruit salad delivered? Go to the nearest grocery store once a week and buy what you need. That's what normal people have done for the last 100+ years.
Food delivery is a solution in search of a problem. And the food delivery companies are little more than a stock market pump and dump scam.
Re: (Score:2)
The delivery person will likely get sorted out after a few bad deliveries as the complaints roll in, the people who dont get their food or going to call. Either that or it was a one off mistake.
I do think it's bizarre that a lot of these people dont at least knock though. Pizza delivery people have been doing their thing for over a half century now and they actually wait to hand you your food so there's no reason these people cant at least knock.
Inflation up, discretionary income down. (Score:2)
You have to spend more on food, so you have less to spend on a convenience like home delivery.
I see nothing unexpected here. Coupon clipping or the web equivalent is going to get more popular again too.
s/European/American (Score:2)
Re: (Score:2)
Customers and restaurants may adjust their strategy for the rising cost of labor by reverting back to takeout - how then should the delivery companies respond to being shut out? I don't see how.
Re:s/European/American (Score:5, Interesting)
Doordash is down 38.2% since their IPO, last time I checked they were still burning billions in VC funds while not turning a profit trying to swallow the whole market while being a pure shit service for both customers and "contractors".
I hope they die. Saying this as a former "VIP" paying subscriber. Sadly GRUB was de-listed by JET, but you're right. I saw a headline saying Barclay's expects a $20 minimum wage - doing that will further drive up the cost of everything, which is already out of control.
The FED Is already committed to not giving a fuck what happens and is trying to downplay the Treasury Bond yield curve inversion earlier this week, you know, the signal that has thus far been 100% accurate predicting recessions.
I'd say this is going to be interesting, but I'm not actually a masochist, I just play one at work.
Re:s/European/American (Score:4, Insightful)
I agree with much of this (the US financial system is a shitshow right now and impending collapse is imminent) however it's not a $20 minimum wage that's the straw that's going to break this back. The corporate and financial elite as well as politicians are heavily trying to push this narrative as a cover for them crashing the financial system (again) but higher wages have nothing to do with it.
What's driving the inflation rate (especially in the US) is the Fed printing unlimited money to prop up the banking and financial sector to the tune of trillions. This coupled with a system that actively promoted unbridled and unconstrained greed of biblical proportions is what's at the root of this impending crisis. When you have a multi trillion dollar wealth transfer (estimated to be anything from 3 to 20 TRILLION dollars during the pandemic from the poor to the rich) the notion that giving the poors a TINY proportion of that back causing inflation is ridiculous.
The pandemic is also a smoke screen. It may have exposed the issues but it didn't cause them. Having to prop up the pandemic just exposed the rest of the system as it was. Now it's a matter of perspective of course. You COULD argue that if it wasn't for the pandemic the outright fraud, thievery and greed would have continued unabated and without the massive and horrendous state we're about to get ourselves into. You also wouldn't be outright wrong. But it's again just an excuse and a distraction - the real problem wasn't and isn't the pandemic and never was. The real problem is the entire financial and corporate sectors are rotten to their core.
The depressing part is it's not the wealthy and the elite who are going to suffer though - that's going to be left to the poor. Socialising losses and privatising profit is, after all, the American way.
Re: (Score:2)
That's pretty much all true, but the money printing is already done.
Not a big deal (Score:2)
They'll just make up for it in volume.
Self-Inserting middlemen losing business. (Score:2)
Why isn't anyone delivering just heavy stuff? (Score:2)
The real question (too long for Subject): Why doesn't anyone just deliver core "consumables"? Specifically beverages (heavy) and bulky items.
Just soda and other beverages. Nothing refrigerated. Not even a big selection. Maybe alcohol, probably not, too complicated/legal issues.
That and bulky items like TP and paper towels.
Choose items, weekly delivery day/time block, adjust/cancel subscription as needed. Delivery to door, text to let you know.
IUseThatALot.com is available...
Low labour cost and pandemic driven? (Score:2)
Clearly the pandemic had some impact on food delivery increases.
Anecdotally, I'm sure we can all recall our spending habits during various "lockdowns" - at least, in the UK, as we had several long lasting lockdowns of various degrees.
The market was already reaching an unsustainable saturation point before the pandemic.
It was mostly based on cheap labour - "self employed" delivery people, being paid right on the edge of minimum wage, with zero additional work related benefits and having to provide their own
Value isn't "lost", it decreases. (Score:2)
I'm sick of these headlines written as if we had this huge abundance of valuable material and resources and they just vanished into thin air one day. Nothing was "lost". Nothing was ruined.
If an oil pipeline ruptures and ruins a water supply, or if an earthquake demolishes a city, that's what I would call loss. That can actually cause a recession as people have to make do with fewer valuable resources than they had previously.
Here, the market cap (the price of the last trade, multiplied by the number of sto