Just Eat sees £600m wiped off stock market value after surprise loss

Just Eat had nearly £600m wiped off its stock market value after the online takeaway firm booked a loss for 2017 and revealed plans to invest £50m in its delivery network.

Its shares fell by 12%, making it the biggest early faller in the FTSE 100, after the company posted a pre-tax loss of £76m for last year. The loss came on the back of a £180m charge in Australia, where it faces intense competition in Sydney and Melbourne.

Investors also reacted to the news that Just Eat is planning to make major investments in delivery services in the UK, Canada, Australia and New Zealand.

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Just Eat has traditionally collected orders on behalf of independent restaurants, which deliver the food themselves. However, the new chief executive, Peter Plumb, said that delivering on behalf of branded restaurant chains – such as KFC and Burger King – represented an £18bn market opportunity and was a “significant new driver of long-term growth”.

Neil Wilson, a senior market analyst at ETX Capital, said investors were nervous about the shift in strategy.

“There are doubts whether this will deliver for investors and there is a risk of becoming embroiled in a low-margin street fight with the likes of Amazon, Uber Eats and Deliveroo,” he said.

“There is a risk of management taking the eye off the ball by focusing on delivery instead of making the most of its status as the go-to platform and primary distribution channel for restaurants.”

Just Eat’s revenues jumped by 45% to to £546m in 2017, and highlights included a record December when the company processed £10m orders. On the day of the final of ITV’s The X Factor, sponsored by Just Eat, it took more than 500,000 orders, breaking its previous daily records.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said news of the investment overshadowed the results. “Mr Plumb has a big job to do today to convince the market that this investment will deliver returns strong enough to justify derailing Just Eat’s earnings growth in the near term,” he said.

“Expected returns on capital have yet to be spelled out, likewise the expected payback timeframe for the investment. If he can produce convincing answers to such questions, the market may well reward the group for its continuing underlying momentum.”