Berlin-based food delivery giant Delivery Hero witnessed a significant drop in its shares as it announced the sale of its minority stake in Deliveroo, a prominent food-ordering service in the UK. The decision to offload 68 million Class A ordinary shares in Deliveroo at a price of £1.13 per share, marking a 7% discount from the previous day’s closing price of £1.22, resulted in a sale worth approximately £76.8 million for Delivery Hero.
The move comes as Delivery Hero seeks to reallocate its resources more strategically, with the company expressing a desire to focus its cash allocation more effectively. The decision to sell the stake reflects a departure from its initial investment in Deliveroo back in 2021 when it acquired the shares at a higher price.
However, the market reacted negatively to the news, with Deliveroo’s shares plunging by as much as 7% on Tuesday. This drop was mirrored in Delivery Hero’s own stock performance, which sank nearly 6% to reach a record low. Investors seem to have responded unfavorably to the sale, possibly due to concerns about the implications for Delivery Hero’s future strategic positioning and potential impact on its financials.
In contrast, Deliveroo had previously projected a positive outlook for its 2023 annual earnings, expecting them to slightly exceed the earlier guidance of £60 to £80 million ($76 million to $101 million). Additionally, the company anticipated a 3% increase in the value of orders on its platform, aligning with its previous forecasts.
Despite Deliveroo’s optimistic projections and its solid performance in 2023, during which its shares surged by over 30% amid a broader recovery in the technology sector, the recent stake sale by Delivery Hero has led to a bearish sentiment in the market. Investors are likely to closely monitor both companies’ future strategies and financial results in light of this development.
(Source: Financial Times | PYMNTS | Bloomberg)
