Fri, 23rd Mar 2018
The takeaway delivery company Just Eat served up a profit warning earlier this week, shocking investors who had previously been enjoying the euphoric rise of the company. Shares in Just Eat had hit a record high two weeks ago, putting the company’s market cap at £6 billion, after a surge of more than 250% since it floated just under four years ago.
The company is still enjoying a heady valuation. It announced annual revenues of £546 million from its online ordering platform for restaurants, and it believes that it could grow to see revenues of between £660 and £700 million this year. Just Eat is still at the top of the P/E ratings for the FTSE 100, and even after the shares fell following the health warning, it still looks strong.
New boss Peter Plumb booked an impairment charge for £180 million relating to the company’s acquisitions in New Zealand and Australia. This created a full-year loss of £76 million. The company is seeing increasing competition all over the world, and customers expect more from the digital services that they consume.
Rivals such as Deliveroo and UberEats are challenging the company, but there are clear growth opportunities in some under-served markets, and Just Eat is active in 12 major markets, including in Brazil. The company has a global user base of 21.5 million customers, and saw an increase of 26% in orders compared to 2016, but investors would do well to question how long the growth will be able to continue.