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Why Grubhub Parent Just Eat's Stock Jumped Thursday

By Danny Vena – Jan 13, 2022 at 1:40PM

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The online food delivery platform reported robust results for 2021.

What happened

Shares of Just Eat (JTKWY -4.07%) jumped on Thursday, adding as much as 9.8%. As of 1:01 p.m. ET, the stock was still up 8.7%.

The takeout food delivery specialist capped off 2021 with preliminary results that were stronger than many investors had anticipated.

So what

Just Eat Takeaway, the parent company of online food delivery service Grubhub, reported preliminary fourth-quarter results that topped off a banner year in 2021. 

A person with a bike helmet and a face mask is making a food delivery.

Image source: Getty Images.

Total orders of roughly 1.1 billion grew 33% year over year. Investors had feared that the loosening of pandemic-related restrictions and the return to in-restaurant dining would devastate Just Eat Takeaway's results. However, its fourth-quarter growth was stronger than anticipated, as total orders of 274 million grew 14% compared with the prior-year quarter.

Robust order growth fueled gross transaction value (GTV) that grew to 28.2 billion euro (roughly $32.3 billion) last year, an increase of 31%. Fourth-quarter GTV of 7.3 billion euro ($8.37 billion) climbed 13%.

Just Eat Takeaway's delivery order growth was strongest in the U.K. and Ireland, with full-year growth of 306%, while more than doubling in the fourth quarter. In North America -- its largest segment -- order growth increased 19% in 2021, slowing to 6% in Q4.

As a result of the strong order growth and GTV in line with its forecasts, Just Eat Takeaway now expects its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin for the full year to come in at the midpoint of its guided range of -1% to -1.5% of GTV.

Now what

Just Eat Takeaway also reaffirmed its guidance for 2022, which includes GTV growing by midteens percentage points. It also said that 2021 was the peak year for losses, with adjusted EBITDA margin improving to -0.6% to -0.8% of GTV. 

Long term, management is guiding for adjusted EBITDA margins that eventually improve to 5% of GTV and adding 30 billion euro ($34.4 billion) in GTV over the coming five years.

It's important to note that Just Eat Takeaway continues to generate significant losses as it invests in its expansion. It could be some time before it's profitable, so investors should exercise caution.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool recommends Just Eat N.V. The Motley Fool has a disclosure policy.

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