On-demand food delivery service providers proved to be saviors when the world almost came to a standstill due to the COVID-19 outbreak in 2020. People were spending a lot more time at home then, due to pandemic restrictions. These restrictions meant that food delivery companies had to work harder to meet the increase in food delivery orders. According to a Zippia report, the United States food delivery revenue increased 17% at $26.50 billion compared to $22 billion between 2019 and 2020.
Food delivery stocks were in the spotlight due to the immense growth in orders. However, as pandemic restrictions have eased and vaccinations work, demand for on-demand food delivery may slow. After being locked down for a long time, people are increasingly dining out and spending time in restaurants.
Against this backdrop, we think it might make sense to avoid fundamentally weak food delivery stocks Uber Technologies, Inc. (UBER), DoorDash, Inc. (HYPHEN), and Just Eat Takeaway.com NV (WORM).
Uber Technologies, Inc. (UBER)
Renowned ride-sharing service provider UBER, in San Francisco, develops and operates proprietary technology applications. It connects consumers with independent transportation service providers for ride-sharing and other forms of transportation services, including delivery service providers for meal preparation, grocery shopping and other transportation services. delivery. In addition, it operates in the Mobility, Delivery, Freight and Advanced Technology group and other technology programs.
On November 26, 2021, UBER announced that it had ceased its activities in Belgium after a Brussels court ruling extended the 2015 cease and desist order against prior service to drivers who rent cars and offer taxi services through the UBER app. The ban on private individuals offering taxi services, which also applies to professional drivers, is a blow to the company.
UBER’s net loss for its third fiscal quarter, ended Sept. 30, 2021, increased 122.5% year-over-year to $2.42 billion. The company’s current assets fell 2% year over year to $9.68 billion. Also, his long-term debt was $9.27 billion, compared to $7.56 billion in fiscal 2020.
Analysts expect UBER’s EPS to remain negative in fiscal 2021 and 2022. Over the past nine months, the stock price has fallen 22.9% to close the trading session in 2020. yesterday at $44.42.
UBER’s bleak outlook is reflected in its POWR Rankings. It has an overall D rating, which translates to a sale. POWR ratings are calculated by considering 118 separate factors, with each factor weighted to an optimal degree.
It has a D rating for value, stability, and sentiment. It is ranked No. 53 out of 78 stocks in the D rating Technology – Services industry. Click here to see UBER’s other ratings for growth, momentum and quality.
DoorDash, Inc. (HYPHEN)
DASH operates a logistics platform that connects merchants, consumers, and dashers across the United States and internationally. The San Francisco-based company operates DoorDash Marketplace, which provides a range of services for merchants to solve critical issues, such as customer acquisition, delivery, and more. It also offers DoorDash Drive and DoorDash Storefront.
On November 22, 2021, San Francisco City Attorney David Chiu said that DASH would pay more than $5 million fined for alleged labor law violations. The city alleged that the company violated San Francisco health care benefits and paid sick leave laws by wrongly classifying the workers as independent contractors instead of employees.
For its third fiscal quarter, ended Sept. 30, 2021, DASH’s sales and marketing spend increased 53.8% year-over-year to $446 million. Its total costs and expenses rose 50.4% year over year to $1.37 billion. Additionally, its net loss increased 135% from the same period last year to $101 million.
DASH’s EPS for its fiscal years 2021 and 2022 is expected to remain negative. It has failed to beat street EPS estimates in each of the past four quarters. Over the past three months, the stock price has fallen 31.2% to close yesterday’s trading session at $135.91.
DASH’s POWR ratings reflect this weak outlook. It has an overall D rating, which equates to a sale. It has a D rating for value, stability, and sentiment. In category D Internet Services industry, it is ranked No. 36 out of 37 stocks. To view additional DASH ratings for Growth, Momentum, and Quality, Click here.
Just Eat Takeaway.com NV (WORM)
Based in Amsterdam, the Netherlands, GRUB operates as an online food delivery marketplace that connects consumers and restaurants. The company forwards orders placed by customers and forwards them to restaurants that prepare and deliver the meals.
GRUB orders in the United States for the third quarter, ended September 30, 2021, increased 3% year-on-year to 63.50 million. The company’s gross transaction value (GTV) for the United States increased 2% year-over-year to €2.10 billion ($2.37 billion). Additionally, its delivery orders for the United States were 43.10 million, representing an increase of 23%.
However, analysts expect GRUB’s EPS to remain negative in fiscal 2021. Over the past six months, the stock price has fallen 43.7% to close the trading session. from yesterday at $10.36.
GRUB’s weak fundamentals are reflected in its POWR ratings. It has an overall F rating, which translates to a strong sell. Also, it has an F rating for quality and a D rating for growth and value. It is ranked No. 70 out of 77 stocks in the the Internet industry. Click here to see additional GRUB ratings for Momentum, Stability, and Sentiment.
UBER shares were trading at $44.74 per share Wednesday morning, up $0.32 (+0.72%). Year-to-date, UBER has gained 6.70%, versus a 0.41% rise in the benchmark S&P 500 over the same period.
About the Author: Dipanjan Banchur
Ever since he was in elementary school, Dipanjan had been interested in the stock market. This enabled him to obtain a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan is particularly interested in reading and analyzing emerging trends in financial markets. Following…