Just Eat Takeaway.com (LON:JET) (JET) which trades as Just Eat in the UK has recently completed the merger with Grubhub and is one of the largest food delivery companies in the world today. The company’s total orders increased 37% in the second quarter and 47% of those orders came from outside the U.S.
Let’s take a look at the catalyst driving business growth.
Profitable business model
Just Eat Takeaway.com has a business model that works for the future. It forwards orders to restaurants that handle the delivery on their own and this forms the majority of its business. I like the futuristic business model because it works out to be much more profitable than taking orders and delivering them. Competitors in the industry are losing a lot of money on delivery and this is where Just Eat Takeaway is making profits. This model can work wonders for it when the orders grow.
It generated a revenue of $4.6 billion in 2020 and $401 million in adjusted EBITDA. The company offers performance and convenience to the customers. It has invested heavily in technology and has not shown any signs of slowing down despite the pandemic.
In the first half of 2021, the company saw an increase in orders by 51% but reported a loss for the period and in the fourth quarter of 2020, the UK deliveries increased by 400% as compared to the same period the previous year. The management is optimistic about the future and believes that the margins will improve going forward.
The company recently provided an upbeat business update but also noted that it could face trouble from FTSE indexes once the London Stock Exchange performs the semi-annual review scheduled in September.
Since Just Eat Takeaway.com is headquartered in Amsterdam and Grubhub is in Chicago, the investment management team will have to determine the nationality of the stock listings for the purpose of inclusion in the index. If there is a removal from an index, it will lead to investors losing their stock to conform to the index makeup.
Update - Decision Made
Just Eat Takeaway.com NV will leave the FTSE 100 on September 20 2021.
FTSE Russell classified Just Eat Takeaway as British after the 2020 combination of Britain's Just Eat and Dutch competitor Takeaway.com, making it eligible for the FTSE, because the company had said it would delist its stock from Euronext Amsterdam.
Just Eat Takeaway backtracked on that earlier this year, prompting FTSE Russell to change the company's assigned nationality to Dutch last month.
Strong growth potential
Just Eat Takeaway.com has large, long term plans to grow in the United States. It plans to invest in infrastructure beyond what Grubhub already has in place. It also aims to focus on the markets where the brand is already well established.
Just Eat Takeaway.com has added grocery to its German service and is preparing to launch grocery delivery across all the markets it operates in. This will be a boost for the company and could lead to the generation of higher sales and revenue.
With the grocery business, the company has a chance to attract new users and provide them with a one-stop solution for all the requirements.
The bottom line
All in all, the company will report strong results this year but investors should keep the regulatory bumps in mind. It is possible that the stock will show volatility after the semi-annual review by the London Stock Exchange.
Not Investment Advice
Note: Views expressed are those of the writer. The author does not own any stocks mentioned. The article is information, not advice. Share prices can rise and fall. Past returns are not a guide to the future. Please do your own research.