Delivery Hero Loses Nearly $6B In Valuation

European food delivery service, Delivery Hero, lost $5.7 billion in valuation after the company saw its share value plunge on Thursday.

The decline came despite improvements in sales and revenue in Q4 2021. The company generated $11 billion in gross sales volume, up 39% year-on-year meanwhile, its revenue increased by 66%, reaching $2.1 billion.

Delivery Hero’s overall sales volume for the year came out at $40.6 billion for 2021, slightly higher than its own projections, and its revenue totaled $7.5 billion for the year, which was in line with analysts’ expectations.

The adjusted core profit margin for the year was slightly worse than expected as it came out to -2.2%.

Still, the company saw its share value decline by 29%, resulting in a loss in volume. The decline in value came as a result of the company’s 2022 guidance, which suggested that the platform would just breakeven.

″It only takes a small bump in the road to puncture sentiment around the pandemic winners like Delivery Hero, and the projections for 2022 are somewhat underwhelming,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, in an interview with CNBC.

“There is heightened sensitivity surrounding delivery companies as workers return to offices and restaurants fill up with people desperate to jump start their social lives,” she added.

Delivery companies such as Delivery Hero that have yet to become profitable are fast losing favor among investors as central banks are planning to increase interest rates to tackle rising inflation.

That said, Delivery Hero’s CEO Niklas Östberg noted that the company has not seen much of an impact due to inflation and that the company already operates in countries such as Turkey and Argentina that have extreme inflation levels.

The company still has a difficult path to profitability. Last month, the company announced that it is winding down its operations in its home market of Germany, just a few months after its launch. According to Östberg, the company was late to the game and required a “10, 15-year investment period” to catch up.

Originally published at https://retailbum.com on February 10, 2022.

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