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Delivery Hero CEO Niklas Östberg Apologizes as Company’s Shares Tumble Over 30%

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by Benjamin Godfrey · 3 min read
Delivery Hero CEO Niklas Östberg Apologizes as Company’s Shares Tumble Over 30%
Photo: Delivery Hero / Facebook

Delivery Hero as well as its competitors have been experiencing a similar trackback in the valuation of their shares as the economy recovers from the coronavirus onslaught that favored them all.

The shareholders and investors of the German multinational online food-delivery service, Delivery Hero (ETR: DHER) are not having a good time at the moment as the shares of the company tumbled as much as 30% on Thursday. Taking to Twitter, the company’s Chief Executive Officer (CEO), Niklas Östberg apologized to the company’s shareholders for the massive plunge, promising to stay on course with the firm’s strategies which he promises will work in the long run.

“Today our share price dropped 30%! I’m truly sorry for all shareholders! I’m in your boat. We will not change our strategy because of the drop but we will work even harder to prove our investment strategy is going to pay off,” he shared in the tweet.

The 30% drop in the shares of Delivery Hero accounts for the company’s worst performance to date, and the massive fear amongst investors is yet to be allayed as the share has dropped by an additional 4.47% to 44.41 Euros at the time of writing.

The sentiments that pushed investors to sell off the shares of Delivery Hero take its backing from the cautious estimate the firm provided for the current fiscal year. According to the firm, it is projecting an overall sales volume of 44 billion to 45 billion euros ($50 billion-$51 billion) with an expectation of core margin profit ranging between 1% and 1.2% respectively.

“There’s nothing that halts a growth story in its tracks quite like an outlook which doesn’t promise the kind of growth that investors had been banking on,” Danni Hewson, financial analyst at AJ Bell, said in a statement as reported by CNBC.

Despite this conservative guidance, Delivery Hero did not entirely perform badly in the immediate past quarter, as it reported a revenue of 1.9 billion Euros across all of its segments, soaring 66% Year-on-Year.

Additionally, Delivery Hero said its Gross Merchandise Value (GMV) topped 9.6 billion, up 39% YoY. In all, Östberg said the company “closed the year by becoming the majority shareholder of Glovo, adding to our footprint to reach 2.2 billion customers upon closing.”

Delivery Hero Shares Models Other Competitor’s Drawbacks

Delivery Hero as well as its competitors have been experiencing a similar trackback in the valuation of their shares as the economy recovers from the coronavirus onslaught that favored them all.

Compared to Delivery Hero whose shares have plummeted by more than two-thirds in the past year, the shares of Deliveroo PLC (LON: ROO) has plunged by more than 50% in the same time frame, with Just Eat Takeaway.com (AMS: TKWY) recording a 58% slump.

Based on the challenges these smaller food delivery companies are facing, multinational investment banks particularly JPMorgan Chase & Co (NYSE: JPM), and Barclays PLC (LON: BARC) have cut their price targets for Delivery Hero’s stock today.

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Benjamin Godfrey

Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.

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