(Bloomberg) — Delivery Hero SE briefly slipped below its initial public offering price for the first time since 2017, after a relentless selloff this year wiped out nearly three quarters of its market value.
The food-delivery stock has cratered this year, shedding about 18.1 billion euros ($19.1 billion) of its market value as investors question the company’s path to profitability amid rising borrowing costs. European peers have also hit a rough patch, with Just Eat Takeaway.com NV plunging 62% and Deliveroo Plc down 59%.
Delivery Hero shares dropped as much as 2.7% to a record low of 24.96 euros before reversing losses on Tuesday, dipping below the IPO price of 25.50 euros for the first time in five years. The stock is also the Stoxx 600 Index’s worst performer in 2022.
This time last year, the food-delivery industry was still riding high on a pandemic-fueled boom in demand. That optimism came crashing down as economies reopened. Relentless competition and inflation are squeezing already tight budgets, pressuring a sector that has yet to turn a profit. Rising interest rates and a broader rotation out of high growth stocks didn’t help.
Inflation is also hitting consumer wallets. Sagging sales are adding further fuel to the heated competition for market share in Europe, with rapid grocery delivery the latest battleground as startups like Getir and Gorillas push into the fray.
“Inflationary headwinds have been building, obviously, but they’re getting worse,” Berenberg analyst Sarah Simon said in a phone interview. Simon cited Tuesday’s data from Barclays Plc, showing that growth of consumer card spending on food takeaways slowed in the U.K. in April.
Disclosure concerns are weighing heavily on Delivery Hero’s stock. The company failed to break out order numbers in the first quarter after shifting to focus on profitability rather than volume.
To be sure, the sector may have reached a floor with this year’s losses. And the industry’s renewed focus on breaking even is being welcomed by the market. Delivery Hero said last month it expects to hit an adjusted measure of profitability for the first time next year.
Nonetheless, Simon said investors may stay on the sideline before the company delivered on its profit target. “We want to see these numbers before we actually invest on the basis of them,” she said. “It’s not about what could happen. It’s what has happened.”
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