Investors gave their backing to online delivery firm Just Eat’s global growth drive, sending its shares higher even though new investments in Brazil and Mexico will weigh on earnings.
The shares in London closed over 6% higher, helping pare its losses to 16% from a year ago. The delivery firm is valued at almost £4.4bn (€3.88bn).
Just Eat has grown rapidly since it floated in 2014 but it spooked investors this year by repeatedly hiking the amount it needs to spend to fend off rivals Deliveroo and Uber Eats in markets stretching from Canada to Australia. It was founded in Denmark in 2001. It said investments in Brazil and Mexico would push 2018 underlying core earnings to the lower end of the £165m to £185m range, despite revenue forecast at the top end of a £740m to £770m range.
Analysts said the rapid growth at the top line of the service justified the investment in the network and brand. “To us, this is exactly the right approach,” said analysts at Liberum. “While Just Eat is the market leader in nearly all the markets in which it operates, the food delivery market has not fully transformed yet from phone to online and so the emphasis should be on growing share and growth generally,” it said.
Early last month, Deliveroo reported a deeper pre-tax loss for its full financial year after it invested a further £100m to expand into new markets. Just Eat reported a better-than-expected 16% rise in British orders to £30.3m in the third quarter, driven by strong trading in September. Group orders were up 27% to £54.7m and overall revenue rose 41%.
Reuters. Additional reporting Irish Examiner.