As fears of the spread of the COVID-19 pandemic lessen, the food delivery industry continued its swift downturn with the news Tuesday (May 10) that Delivery Hero’s share price briefly fell below its 2017 initial public offering (IPO) price for the first time.
According to a Bloomberg report, the flurry of sales left Delivery Hero SE below its 2017 level for the first time since the company went public, part of a downturn that’s seen the fast delivery service lose about 75% of its value.
Overall, food delivery services have lost about $19.1 billion in value this year, with Just Eat Takeaway.com (down 62%) and Deliveroo (down 59%) facing the steepest declines in 2022.
It’s a 180-degree turn from where the food delivery sector stood a year ago, when the pandemic led to a boom in demand, but people have made their way back out of their quarantines and aren’t relying on food delivery nearly as much as they did a few months ago, the report said, in part because of rising inflation and increasing competition in the space.
“Inflationary headwinds have been building, obviously, but they’re getting worse,” Berenberg analyst Sarah Simon told Bloomberg. “We want to see these numbers before we actually invest on the basis of them. It’s not about what could happen. It’s what has happened.”
Related: Delivery Aggregator Losses Point to Economic Value of Platform Model
The food delivery sector has been struggling for months. In February, Indian food delivery group Zomato announced third-quarter losses of $36 million, while fellow Indian food delivery giant Swiggy saw about $215 million in losses.
In late January, news broke that the ultrafast grocery delivery services popping up in the U.S. and in other parts of the world can lose as much as $20 per order on average, including ad spending.
On the flip side, Uber Eats — the delivery arm of ride-hailing service Uber — achieved its first profitable quarter in the fourth quarter of 2021.
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