The Just Eat Takeaway share price has plunged! Here’s what I’d do about the FTSE 100 stock now

The Just Eat Takeaway share price has plunged on news that it’s acquiring GrubHub. But is that necessarily a long-term negative for the food delivery app? 

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Just a few days ago the FTSE 100 food delivery provider Just Eat Takeaway (LSE: JET) touched impressive highs. But the rise in the JET share price to £90+ levels was short-lived. In a span of days it has fallen by more than 18%. It’s now at levels last seen during the stock market crash, triggered by JET’s takeover of the US-based Grubhub

It’s not unusual for the acquiring company’s share price to fall on such announcements. The reverse is true for the acquired company. Both the Just Eat Takeaway share price and GrubHub’s share price trends are proof of this. However, the $7.3bn buy needn’t be a long-term negative for JET’s share price. It’s true that an acquisition always carries the risk of integration challenges. Corporate history is strewn with examples of well-meant deals that went awry. This risk is particularly high for JET, which itself was very recently formed through the merger of UK’s Just Eat and the Dutch Takeaway.com

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Consolidation in the food-delivery industry

But it’s also true that this is a time for consolidation in the food delivery industry. The industry is still young. Takeaway.com was formed only two decades ago, for instance. There has been a proliferation of these services in the years since. Gaining market share, then, became a key means to ensure stability in revenues and ensure future growth in an otherwise fickle consumer market. The fact that GrubHub almost got acquired by Uber, shows the severity of competition among the top players in the industry now.

Much long-term potential 

Besides just expanding in size, JET now has access to the big and growing US markets through GrubHub, where it hadn’t operated so far. I liked the long-term potential for the JET share price because of its business in any case. The latest acquisition has only added to its attractiveness for me. Online markets are changing the face of business, and the likes of JET are leading the changes in the food delivery industry. As consumers, many of us have first-hand experience of the convenience that apps like JET and its rival Deliveroo offer. I’m sure if we were skeptical earlier, the restrictions imposed by lockdowns have turned at least some of us into staunch converts.  

Verdict for the Just Eat Takeaway share price

This is all very good. But its financials can’t be ignored. JET’s a loss-making company, which isn’t surprising either. It’s the price of gaining market share in a competitive market. The company’s debt-to-equity ratio has also been on the rise per Financial Times data. I’d keep an eye on this ratio if JET continues to feed its appetite for acquisitions.  

Much as I like to invest in profit-making companies, JET’s an exception because of the nature of the industry. It seems to be on the right path, which gives me confidence. It’s gaining market share, which increases its chances for success. I think it would be worthwhile to buy at the current JET share price, when it’s still subdued. 

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Satellite on planet background
Investing Articles

£3.3bn raid sends the Vodafone share price up. Here’s what I’d do

The Vodafone (LON:VOD) share price opened higher on Monday, as news of a big buy from a major investor was…

Read more »

Happy woman with excess weight smiling and dancing alone in sports clothes
Investing Articles

Top British growth stocks for May

We asked our freelance writers to share the top growth stocks they’d buy in May, which included miners and musical…

Read more »

Electric cars charging at a charging station
Investing Articles

A cheap UK share I’d buy for the electric vehicle revolution

This cheap UK share has collapsed in value since I bought last year. But here's why I'm thinking of buying…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

3 distressed stocks with huge potential that I’m considering for my portfolio!

These three distressed stocks have performed badly in 2022, but that doesn't mean they won't recover. Here's why I'm considering…

Read more »

Luxury inside of NIO car
Investing Articles

Here’s why I’ve just bought NIO shares!

I've recently bought NIO shares, despite the stock being down nearly 80% over the past year. Here's why!

Read more »

Mature people enjoying time together during road trip
Investing Articles

Is now the time to buy Tesla shares?

Tesla's share price has fallen in 2022 and so has its valuation. Edward Sheldon looks at whether this is a…

Read more »

A graph made of neon tubes in a room
Investing Articles

Are Woodbois shares worth me buying at 4.7p?

Jon Smith considers the recent surge in price for Woodbois shares, and wonders if the move lower last week represents…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

How I’d generate a passive income for life with just £20 a week

Dividend shares can be an excellent way to earn a passive income for life. Our writer discusses a plan to…

Read more »