Food Delivery Stocks Lose $24 Billion in Just Three Months

In a market gripped by concerns over rising interest rates and soaring inflation, investors are avoiding European food delivery companies, turned off by their steep losses and determined efforts to expand. From a report: Shares in Delivery Hero SE plunged 59% last quarter, the second-worst performance in Europe's Stoxx 600 Index. Peers Just Eat Takeaway.com and Deliveroo Plc dropped more than 35%. The three stocks wiped out a combined $23.7 billion, more than half their market value. While it's no surprise when tech stocks struggle in times of rising borrowing costs, the sharp slump in food delivery shares underscores the penalties markets can impose on companies for prioritizing growth when they are yet to turn a profit. Companies in the sector have done a bad job of adjusting their strategies to the rising cost of capital, Jefferies analyst Giles Thorne said in an interview. "The cost of capital goes up, you don't make money and you've got debt -- then that's how equity gets crushed." The fear of losing market share has driven increased spending, even as sliding equity valuations signaled investor disapproval. Just Eat expanded into the U.K. grocery delivery market in December, after previously saying the category lacked scale. Delivery Hero agreed to buy a majority stake in Glovo in a transaction that valued the Spanish delivery startup at 2.3 billion euros ($2.5 billion).

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