MARKET REPORT: Just Eat can’t live up to its pandemic boom

Investors lost their appetite for Just Eat Takeaway shares as concerns grew that the pandemic business boom is waning.

The delivery group slumped to the bottom of the FTSE 100 leaderboard, despite reports that orders rose 61 percent in the first half of the group.

In the UK, orders rose a staggering 733 per cent in the first six months of the year compared to 2020, as the Brits struggled through a third lockdown and a soggy spring kept coming back for more takeaways.

Off the boil: Just Eat dropped to the bottom of the FTSE 100 leaderboard despite reports that orders were up 61% in the first half of the group

It also managed to squeeze customers away from Uber Eats and Deliveroo (down 1.5 percent, or 4.4 pence, to 299.2 pence).

The solid start to the year has prompted the group to improve the company’s forecasts for the full year – and it now believes a key measure of gross transaction value this year will be between £24bn and £26bn.

Its performance has improved with the acquisition of US rival Grubhub, who bought it for £5.8bn, just a few months after Just Eat and Takeaway themselves merged last year.

In a trading update, Just Eat added it would make much more money for the rest of the year, saying its losses had “peaked” in the first half, driven by fee caps in North America and new investment.

Inventory Monitoring – Costain

Costain slipped when it told shareholders that the value of the orders had fallen.

The HS2 and Thames Tideway Tunnel contractor said its order book was £4bn by the end of the first half of June, down from £4.2bn at the same time last year.

The company had an average of more cash available at the end of each month – around £103 million – compared to 2020.

Also in the first six months of 2021, Costain finally drew a line under a problematic project with the Welsh Government over work on a main road through the Brecon Beacons. The stock fell 4.6 percent, or 2.7p, to 56.1p.

Just Eat Takeaway was one of the so-called ‘pandemic winners’ that saw business thrive during the lockdown.

But with countries – particularly the UK – reopening and rushing customers back to bars and restaurants, the question now seems to be whether, and how quickly, this will disappear.

Chris Beauchamp, chief market analyst at IG, said: “Just Eat’s performance continues to disappoint, as evidenced by the share price reaction this morning. A 733 per cent increase in UK order growth just doesn’t seem to do it anymore, and in any case it will probably be impossible to match it for the next half given the expected return to pubs and restaurants and the associated ongoing decline in takeout orders.’

Shares fell 9.1 percent, or 585p, to 5837p overnight, after last year’s peaks around 8380p.

At the other end of the scale, a rise in forecasts boosted credit control specialist Experian.

It was among the Footsie’s top gains after it reported revenues were up nearly a third in the first quarter.

In the US, the largest market, the credit comparison market performed well as more people applied for credit cards and loans.

Shares of the group – which expects sales to grow to 15 percent this year – were up 2.5 percent, or 73p, to 3050p.

However, the FTSE 100 as a whole had a miserable day, dropping 1.1 percent or 79.17 points to 7012.02.

It was dragged down in part by BP (2.9 percent, or 8.7p, to 295.05p) and Shell (2.3 percent, or 32p, to 1377p), which followed a drop in oil prices.

The value of a barrel of Brent oil fell more than 1 percent to $74 yesterday as traders braced for more oil to enter the market after Saudi Arabia and the UAE reached a production deal.

Bitcoin also slumped, falling 3 percent to around $31,781.

Susannah Streeter, senior equity analyst at Hargreaves Lansdown, said this may be due in part to concerns about central banks considering launching their own digital currencies.

The FTSE 250 was also in the red, falling 1.1 percent or 248.79 points to 22501.25.

White-collar recruiter Hays was among the biggest decliners (8.6 percent, or 14.4 pence, to 153.3 pence), despite raising guidance – which is becoming something of a theme in the stock market.

It said it expects annual profits to be £95 million, higher than expected, but noted that there are ‘clear’ skills shortages in some sectors.

Chief executive Alistair Cox said the company recovered in all of its largest markets, including the UK, Germany and Australia.

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