Earlier this year, activist investor Cat Rock Capital penned an open letter to Just Eat (JET) investors. The hedge fund, whose 5.1 per cent equity stake ranks it among the food delivery app’s largest shareholders, called for the chief financial officer and supervisory board to be replaced and argued that misleading company guidance ahead of shareholder votes on the acquisition of American peer Grubhub had resulted in “value destruction”.
- Chunky revenue growth
- Encouraging new partnerships
- No profit forecast until 2026
- Burning through cash
- Big M&A mistake
- Forecasts downgraded
The hedge fund’s key takeaway – if you will – is that Just Eat is a company that is “languishing due to poor capital allocation, failed financial management, and lack of credibility with capital markets”. With the share price down by almost 60 per cent over the last year, it’s hard to argue with the last argument. And with post-pandemic trends and unfavourable consumer and cost dynamics hurting the company’s prospects, it is hard to see where long-term profitable growth is going to come from.