Should You Buy Just Eat Takeaway (JET) Shares Despite Slowing Growth?

Trade Just Eat Takeaway shares Your capital is at risk
Simon Mugo
Updated: 20 Apr 2022

Key points:

  • Just Eat Takeaway shares edged higher today on an upbeat Q1 report.
  • The firm’s shares have fallen 45% in 2022 but could be headed higher.
  • In addition, JET is considering selling GrubHub, a smart move for the firm.

Just Eat Takeaway.com NV (LON: JET) just released its Q1 2022 trading update, where it handled 264.1 million orders missing the 286 million orders target set by JPMorgan analysts.

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The meal orders and deliveries firm is in a tough spot as analysts adjust their ratings on loss-making stocks that were booming after the COVID-19 pandemic struck in March 2020.

Also read: Five Best Starter Stocks For Beginners.

The company said it expects to grow its gross transaction volume (GTV) by single-digit percentages this year compared to its earlier estimates of GTV growth in the mid-teens.

However, investors were happy to see that Just Eat Takeaway was considering the partial or complete sale of its US Subsidiary Grubhub to raise cash and lower its debt burden.

Unfortunately, the company is likely to incur a loss on the sale since it acquired GrubHub for $7.3 billion in June 2021 amid an industry-wide surge in acquisitions. Yet, the entire company is now worth Є5.8 billion ($6.3 billion).

Still, GrubHub’s disposal is considered a smart move by the company since it would unlock much-needed cash for Just Eat Takeaway while reducing its operational costs. The company is also looking for a strategic investor if it cannot sell GrubHub.

Just Eat Takeaway also narrowed its loss expectations for the entire year to 0.5%-0.7% of its GTV from 0.6-0.8%, which explains why its shares were trending higher at writing.

Investors were pleased to learn that the meal delivery company expects to register positive pre-tax earnings in 2023, moving away from its expected pretax losses this year.

The food delivery industry has fallen out of favour with investors after many western countries eased all the restrictions imposed during the COVID-19 pandemic earlier this year. The lack of restrictions on public gatherings and public spaces means that more people can now go out to restaurants and eat.

Therefore, most analysts expect demand for food deliveries to decline as people eat out more frequently. The situation is drastically different from last year when many analysts and food delivery companies predicted that their sales would not be affected by the easing of restrictions.

Just Eat Takeaway stock has fallen significantly this year but could have bottomed today given the positive reaction from investors to its Q1 report. I would buy its shares at current prices and hold them until the company sells GrubHub or partners with a strategic investor.

These future events are incredibly bullish for Europe’s largest meal delivery company, such that I would buy today. However, investors should remember that there are no guarantees in the stock market. We could quickly get a decline in JET shares.

*This is not investment advice. Always do your due diligence before making investment decisions.

Just Eat Takeaway share price.

Just Eat Takeaway stock price 20-04-2022
Source: IG

Just Eat Takeaway shares have fallen 45% in 2022 and could be headed lower if nothing changes.

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