The boss of European food delivery firm Delivery Hero has apologized to investors after shares of the company plummeted more than 30% on disappointing earnings guidance for 2022.
“Today our share price dropped 30%! I’m truly sorry for all shareholders! I’m in your boat,” Niklas Östberg, Delivery Hero’s CEO, said via Twitter on Thursday.
Despite reporting a jump in fourth-quarter sales, Delivery Hero’s shareholders were spooked Thursday after the firm announced cautious estimates for the coming year.
Delivery Hero said it expects overall sales volumes of 44 billion to 45 billion euros ($50 billion-$51 billion) in 2022, falling short of analysts’ expectations. The company also forecast a negative margin on core profit of between 1% and 1.2%.
Nevertheless, Östberg vowed to continue with Delivery Hero’s current strategy, with the promise that it would eventually pay off.
“We will not change our strategy because of the drop but we will work even harder to prove our investment strategy is going to pay off,” he said.
Delivery Hero shares plunged over 30% on Thursday, their worst drop on record. On Friday, the stock fell a further 12%. The company has lost nearly 6.5 billion euros ($7.4 billion) in market value since Wednesday’s close. Analysts at JPMorgan and Barclays cut their price targets for the stock on Friday.
“There’s nothing that halts a growth story in its tracks quite like an outlook which doesn’t promise the kind of growth that investors had been banking on,” Danni Hewson, financial analyst at AJ Bell, told CNBC Thursday.
Delivery Hero was one of the darlings of the coronavirus pandemic, with shares surging in 2020 as investors flocked to beneficiaries of “stay at home” trends such as online food ordering and video conference tools.
Such stocks have seen a pullback lately, however, as Covid-19 restrictions are being wound back and central banks begin to talk of hiking interest rates and tapering stimulus measures to tackle rising inflation.
Delivery Hero has lost roughly two thirds of its value in the last 12 months, while Deliveroo and Just Eat Takeaway.com have fallen 50% and 58% respectively.
In Delivery Hero’s case, investors are concerned the company is taking longer than rivals such as DoorDash and Uber to attain adjusted profitability.
Food delivery businesses are looking to consolidation to stay ahead and fend off emerging challengers, including rapid grocery delivery apps like Getir and Gorillas. Delivery Hero recently agreed to acquire a majority stake in Spanish rival Glovo, while DoorDash plans to buy Finnish delivery firm Wolt.