Investors on either side of the Atlantic have different appetites for food delivery companies. That’s one explanation for the valuation gap between DoorDash and Just Eat Takeaway.com . The rivals have similar revenue and growth prospects, but the U.S. group’s $57 billion market capitalisation is four times that of its European rival. As each pushes into the other’s home market , the divergence is unlikely to last.
By contrast, Just Eat shareholders worry CEO Jitse Groen has bitten off too much by acquiring U.S. group Grubhub earlier this year. The company had a meagre 15% of the American food delivery market in October; the total value of orders in the three months to September grew by just 3% year-on-year. Groen has also been sceptical about delivering groceries. Meanwhile, competitors are challenging Just Eat in Germany, where relatively few restaurants offer deliveries.
One of those competitors is DoorDash, which last month bought Finnish food delivery startup Wolt for $8 billion. However, the U.S. company confronts a very different market. Most European countries have stricter rules on employing casual workers, while consumers are less generous with tips for delivery riders.
For now, DoorDash has the edge when it comes to profitability: analysts expect it to generate EBITDA of $943 million by 2023, compared with just $350 million for Just Eat. However, DoorDash is valued at 56 times that EBITDA, after deducting net cash. Its Dutch rival trades at 41 times. Notwithstanding the different appetites of American and European investors, the gap looks set to narrow further.- DoorDash on Nov.
- Anglo-Dutch food delivery company Just Eat Takeaway.com bought Grubhub for $7.3 billion in June, but has since faced calls from investors to sell it due to competitive pressures in both the United States and at its core European operations. The company’s Chief Executive Jitse Groen on Nov. 17 said at a conference that he has no plans to sell its U.S. subsidiary Grubhub, but the company is actively looking for strategic partnerships for the business.
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