stock market crash
Lieferando, Delivery Hero, Hello Fresh – the crash of the Corona winners
Lieferando dominates the German market – and still has to fight
© Sebastian Kahnert / DPA
Food delivery services were in greater demand than ever during the corona pandemic. But in the past few months, Lieferando, Delivery Hero and Hello Fresh have crashed dramatically on the stock exchange. What’s going on there?
Anyone who walks through the streets of some large city districts might think that since the corona pandemic there has been no more lucrative business than delivering food and drink to people’s homes. One constantly encounters couriers from Gorillas, Flink or Getir, bottle post delivery vans block the driveways before an army of pizza delivery men swarms out in the evening.
In fact, most of these providers are anything but profitable and burn a lot of money. Investors pour millions after millions into the services in the hope that their own candidate will emerge victorious at the end of a cutthroat competition — and eventually rake in even bigger profits.
But does this calculation actually add up for anyone? Does size really guarantee big wins? If you look at the share prices of the industry giants Lieferando, Delivery Hero and Hello Fresh, you could get your doubts. All three have established themselves as leaders in their areas in recent years, have risen to become listed companies – and yet have fallen dramatically since the peak of the Corona crisis.
Dax group Delivery Hero has lost more than 70 percent of its market value in the past six months. The shares of the Lieferando group Just Eat Takeaway fell by 65 percent in the same period (even 75 percent over the year). And the meal box mail order company Hello Fresh, which was just celebrated as the big Corona winner, is almost 60 percent in the red for the first half of the year. Have investors lost faith in the business model?
Delivery Hero – failed again in Germany
Perhaps the most notable case is that of Delivery Hero. The Berlin-based company is very involved in online ordering services worldwide, has been on the stock exchange since 2017 and has had a place in the Dax since 2020, in which the most valuable German stock corporations are listed. In the home market of Germany of all places, however, Delivery Hero failed a second time during the corona pandemic.
The first withdrawal from Germany dates from 2019, when the Berliners sold their holdings in Foodora and pizza.de to Lieferando after an epic and costly struggle and left the field to the competition. In 2021, the company with the Foodpanda brand was suddenly back, made big plans – and only a few months later stamped the German business again. The reason given by CEO Niklas Östberg is the respect for the financial strength of the US giants Doordash (Flink, Wolt) and Uber Eats, which are now also pushing into the German market with power and millions. In order to keep at least a big toe in Germany, Delivery Hero has invested 200 million euros in Gorillas.
The fact that the company is being punished on the stock exchange is probably mainly due to the fact that it is still in the red more than ten years after it was founded and a business that has been rolled out worldwide. This did not change even in the Corona boom. CEO Niklas Östberg also blames the bad environment in the form of inflation and the Ukraine war for the current stock market crash. But he also said in the Spiegel interview. “It’s an open question how profitable delivery services can be.” A remarkable statement. After all, one is on the right track to record profits soon. I hope so. But: “At the moment all delivery companies are making losses – we are no worse than others.”
Lieferando group Just Eat Takeaway: red numbers despite the Corona boom
These “others” also include the Dutch company Just Eat Takeaway, which dominates the German market for the brokerage of food orders under the Lieferando brand. Delivery Hero’s international competitor ended 2021 with a handsome loss of one billion euros. That was partly due to the expensive takeover of the US delivery service Grubhub (which the Lieferando group is already looking to get rid of), but the operating loss was still around 350 million euros.
In view of the escalating losses, the shareholders found little consolation that sales increased in the Corona year. There is also rumbling in the top management: This week it became known that the chairman of the supervisory board and the head of operations will be relieved of their posts, the latter due to alleged personal misconduct at a company event.
Lieferando is the clear market leader in Germany. But maintaining this position is a grueling struggle with new, financially strong players like Doordash. And the drivers’ working conditions, which are constantly viewed critically, remain a permanent threat to public reputation anyway.
Hello Fresh – is the cooking box party threatening to end?
And the recipe box phenomenon Hello Fresh? Thanks to exploding demand, the company was able to multiply its sales during the corona pandemic, rose to the Dax and was in the black in 2021 despite enormous investments. But many observers expect that things will not continue like this meteorically. Although revenue also increased in the first quarter of 2022, the stock has been plummeting since the end of last year. Investors are apparently unsure whether people will continue to order so many cooking boxes after the pandemic has subsided.