Did somebody say Just Eat (LSE:JE)? Don’t worry, I’m not going to recite the annoyingly catchy advertisement… What I am going to do is explore how Just Eat, a pioneer in the home food delivery industry, has impressively manoeuvred itself to the top of an industry that experts at Forbes estimate will be worth a staggering $200 billion by 2025.
With the recent announcement that Netherlands-based Takeaway.com has fought off competition from Prosus to progress ahead with a merger ,I think this is one stock you won’t want to miss out on.
Origins, expansion and domination
The brainchild of five entrepreneurs in Denmark in 2000, the service first launched in 2001. Fast forward to 2005 and two of the original five bought out the other co-founders and moved the headquarters to the UK. By 2014 Just Eat floated on the London Stock Exchange however before this impressive expansion into the Netherlands, Ireland, India, Switzerland, Italy, Brazil, France and Canada.
Through the astute utilisation of investment and key tactical partnerships, Just Eat cornered several key worldwide markets to become a powerhouse in a relatively new industry – all whilst keenly observing new competitors emerging into the market.
Performance, ground-breaking deals and merger talk
Reviewing the past five years: the Just Eat share price has seen an increase of 140%, albeit with some peaks and troughs. Revenue and profit have been increasing year on year, with the only dip explained by Just Eat investing heavily in its delivery network to fend off competition from Uber Eats and Deliveroo.
Order numbers worldwide are staggering as people embrace the technology on hand to order their meal of choice at the click of a button. Between 2011-2018 Just Eat saw orders increase from 13.9 million to 221 million, an increase of almost 1,500% -which is even more impressive when you think of the competition around during this time period.
With Just Eat releasing a trading update to 31st December 2019, the news that revenue has hit the £1 billion mark is no surprise. As well as this, the announcement of the McDonald’s and Greggs deals will be like the sound of nails against a chalkboard to competitors and naysayers alike. McDonald’s was previously exclusively tied to Uber Eats, however its recent issues have prompted a rethink.
Takeover talk started with Takeaway.com entering with the opening salvo, then in came Prosus with a rival offer. At the time of publication, the Takeaway.com merger has progressed to 90% acceptance. This amalgamation of two companies will result in a £6.5 billion company, with a strengthened presence across the globe and a continued listing on the London Stock Exchange.
What should I do now?
Just Eat’s story is a mightily impressive one, and as a stock it cannot be ignored; if anything it must be watched intently as I believe with previous stellar performance, willingness to invest and adapt to the counter punches of competitors and ability to strike major deals, I would bank on Just Eat having an impressive 2020. Of course, the small matter of a major merger to further solidify its position of home food delivery overlord won’t hurt either.
Jabran Khan 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.