The Germany-based food Delivery Hero fell to 29% Thursday. The reason is the negative market reaction. It generated 9.6 billion euros in the total sales volume. The revenue raised to 66% in the last quarter.
The sales volume rose to 35.4 billion, slightly exceeding its overall sales. The revenues in the rough line were above the expectation. The raise affected the complete profit margin to -2.2%.
The Delivery Hero stock price plummeted to 30% Thursday. The company wrecked 5.1 billion euros in losses. The $5.9 billion in its market value in the result.
The negative market reaction is the main reason. The platform business was expecting a breakeven point. The full-year group core profit margin came from -1% to -1.2%.
Investors of the Delivery Hero are growing weary of the lofty valuation. The increased interest rate went up due to rising inflation. The Bank of England raised the interest rate in December. The U.S. Federal Reserve also called for an increase in interest.
The final analyst AJ Bell stated, “There are certainly some bright spots in this latest update from its core food delivery business, and key investments should ultimately reward patience, but today’s sell-off shows that many investors are nervous.”
Delivery Hero CEO Niklas Ostberg called and explained the less impact on the firm. The company is going to operate at extreme levels. The inflation is badly affecting the company.
The company is not going to raise extra money. It has a strong balance sheet. The food delivery sector suffered in the past months. The major companies are buying smaller rivals. This is to uproot the competition. Delivery Hero aims to buy the stakes from Spanish rival Glovo.
Delivery Hero is struggling in the home market as well. It is winding up the food delivery operation. Ostberg blamed the late arrival of the company. It needs a 10-15 year investment period.