Delivery Hero is selling 68 million Class A ordinary shares in Deliveroo. CNBC reports it is at £1.13 per share, or $1.43. It’s a 7% discount on what Deliveroo closed on Monday.
Reuters reports that the proceeds amount to less than one-third of the initial purchase price Delivery Hero bought the shares for in 2021.
The markets did not receive the news well. Deliveroo shares dropped by 7% and Delivery Hero to a record low of 6%.
Delivery Hero remains unprofitable, and the latest development could send confusing messages to potential investors. According to Reuters, it’s only expected to turn a net profit in 2026.
Although last year, a confident-looking CEO, Niklas Östberg, told CNBC International it would make a profit by 2024.
Last month, Östberg posted on his LinkedIn account announcing the closure of two of their global tech hubs in Turkey and Taiwan. He said, “To build an economically sustainable and profitable business in an environment that has become more challenging for our industry, we have had to bring efficiencies across the organization.”
He seemed optimistic about the future and strategies to reach profitability faster. “We will continue to contend with tough market competition and macroeconomic factors. We are now positioning ourselves to handle this in the best possible way.”
Delivery Hero’s journey to success
In August 2023, Delivery Hero hit a milestone when it achieved a positive adjusted EBITDA. Locate2u News reported on the release of the German online takeaway food company’s full-year revenue outlook, noting how it was then on the “lookout for growth investments.”
Five months later, it’s selling its minority shares in Deliveroo, which creates shockwaves to its market shares. In recent months, it’s not the first time it has sent turbulence to the markets. In September 2023, Delivery Hero was negotiating to divest some of its Asian business.
At that time, when the news leaked, it caused the company’s stock to surge by as much as 13.5%. The investors’ confidence was overwhelming.
Deliveroo’s journey ahead
In its last quarterly update two weeks ago (January 19, 2024), the founder and CEO of Deliveroo, Will Shu, said he was extremely proud of his team’s execution in quarter four, including its latest launch of retail offering.
“We delivered a good performance in UKI and saw International return to GTV (Gross Transaction Value) growth, with encouraging trends in several markets,” says Shu. Deliveroo believes there are “ongoing signs of stabilization in consumer behavior in the quarter.”
“We continue to invest in the consumer value proposition to lay the foundations for future growth,” explains Shu. Deliveroo is set to update its full-year results on March 14, 2024.
About the author
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