Shares of Just Eat Takeaway.com (NASDAQ:GRUB) defied the tech sell-off this week, rising about 8.4% on the week as of 1:50 p.m. ET on Friday.
How did the online food delivery platform accomplish this feat, when so many other profitless tech stocks continued to drop? The company reported some preliminary order and gross transaction value (GTV) numbers for the fourth quarter and full year on Wednesday, and those results were better than expected. That was enough for investors to begin buying, as the stock had been cut in half over the past year.
For the full year 2021, the company's orders grew 33% to 1.1 billion, and GTV grew 31% to 28.2 billion euros (roughly $32.3 billion). However, growth slowed in the fourth quarter, with total orders up 14% and GTV up 13%. While that is a slowing rate, Just Eat was lapping the last quarter before vaccines were widely administered, so it was a tough comparison.
Interestingly, management didn't disclose revenue numbers, but it did say that its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin would come at the midpoint of its previously guided range between -1% to -1.5% of GTV.
Along with the release, CEO Jitse Groen said:
Following the merger of Just Eat and Takeaway.com nearly two years ago, we made significant investments to grow our leadership positions and the Company is now six times bigger in terms of orders. On the back of this success, we have markedly improved our profitability throughout the second half of 2021, and we will continue to improve adjusted EBITDA this year. Meanwhile, we expect our market positions to further strengthen driven by our superior network effects.
Investors appeared to like what they heard, with Just Eat Takeaway up nicely on the week, albeit well off its intraweek high amid Friday's sell-off.
Just Eat Takeaway is still jockeying for position in the highly competitive field of food and convenience store delivery. The company acquired Grubhub in June of last year to enter the U.S., but it now actually has an activist investor pushing the company to sell it. The company is also looking to sell its 33% stake in Brazil's iFood.
However, it's not exactly a great environment in which to sell food delivery assets, given that many now trade far below where they did last year. Still, it's possible Just Eat Takeaway could get a deal done. So, those potential transactions could move the stock later this year.
In the release, the company also gave guidance for the full year 2022, with GTV growth projected in the midteens and adjusted EBITDA margins to improve to between -0.6% and -0.8% of GTV. Management also gave the encouraging statement that 2021 marked the peak of EBITDA losses.
Long term, management expects GTV to more than double in the next five years and adjusted EBITDA margins to eventually hit more than 5% over the long term. If Just Eat Takeaway achieves this goal, that would equate to about $3.5 billion in adjusted EBITDA versus a market cap of just $11.7 billion today.
That seems very cheap; however, remember that adjusted EBITDA is not net earnings, Just Eat Takeaway's share count is likely to rise over time due to stock-based compensation, and this goal will also take years to achieve.