Meals delivery platform Just Eat Takeaway (JET) faces a crunch year, one that could payoff for patient backers, or see investors give up on the stock once and for all.
Just Eat Takeaway is Europe’s largest food delivery business, formed through the merger of UK-headquartered Just Eat and Netherlands-headquartered Takeaway.com.
Since then, it has gone on to raise €700 million of growth funding from investors (€400 million in equity and €300m in convertible bonds) and acquired US-listed Grubhub, a deal which closed in the first half of 2021.
Growth remains rapid. In full year 2021 (to 31 December) the company processed 1.1 billion orders, about a third up on 2020, with GTV (gross transaction value) up 31% at €28.2 billion. So far, so good, and investors liked what they read on Wednesday, sending the share price nearly 5% higher to £37.79.
PROFITS STILL JAM TOMORROW
Yet profits remain elusive. Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) losses for 2021 are expected to come in at around €352 million, based on the ‘improved’ GTV margin of about -1.25%.
Here’s the key point. Just Eat Takeaway thinks 2021 saw losses peak, although they are not over yet. Adjusted EBITDA margins are still expected to be entrenched in the negative, in the -0.6% to -0.8% range. Longer-term, by which we believe it means over the next five years, the company anticipates adjusted EBITDA margins of at least 5% of GTV.
This is a big ask. Investors might well worry that the firm’s bold projections still circle back to the highly competitive pressures and substantial investment required to fight off competition. That's not a great space to be in if stock markets steer a risk-off course through 2022.
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