Just Eat Shares Fall Most in 20 Months Over Delivery Investment

(Bloomberg) -- Shares in Just Eat Plc fell the most in 20 months despite the food-delivery company beating revenue estimates, after concerns over future spending and acquisition costs.

Just Eat's full-year 2017 revenue grew 45 percent to 546 million pounds ($755 million), with underlying earnings up 42 percent to 164 million pounds. International revenue grew 75 percent, representing 44 percent of group revenue, and 10.5 million active customers purchased 1.9 billion pounds worth of food from the platform.

However, shares fell as much as 15 percent, the most since June 2016, after the company also booked a noncash impairment charge of 180 million pounds following acquisition of businesses in Australia and New Zealand. That led to a statutory loss before taxes of 76 million pounds.

Just Eat also plans to spend around 50 million pounds on developing markets and delivery services in 2018. The company expects underlying earnings of 165 million to 185 million pounds in 2018, and group revenue of 660 million to 700 million pounds.

Berenberg analyst Robert Berg noted that while the incremental investment by new Chief Executive Officer Peter Plumb was expected, the size of the investment was not factored into analysts' base-case assumptions yet.

“Unless Mr Plumb can do a good job at the investor presentation in explaining what exactly these new investments will be spent on, and how this will increase medium-term consensus expectations,” shares could react negatively, especially after the extremely strong recent share price performance, Berg said.

To contact the reporter on this story: Giles Turner in London at gturner35@bloomberg.net.

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, John J. Edwards III

©2018 Bloomberg L.P.