JPMorgan immediately downgraded its rating on Just Eat’s shares to ‘neutral’ from ‘overweight’ and cut its share price target to 10,460p from 11,423p.
Uber Technologies Inc’s (NYSE:UBER) Uber Eats arm is planning to launch in Berlin and expand into other cities, according to a Financial Times report cites Pierre-Dimitri Gore-Coty, senior vice president of the US parent company’s delivery arm.
Germany is a strategically important country for Uber and one of the fastest growing ride hailing markets for them, the executive said, adding that the company has signed dozens of restaurants including some household-name chains.
Thanks to JET's strong position in the country, where it operates under Lieferando brand, the commission rates are "extraordinarily high".
While acknowledging that the news puts pressure on JET shares and brings greater scrutiny of Germany over the coming quarters, analysts at UBS noted that Deliveroo has exited Germany in the not too distant past and that Uber has also in recent year exited markets where it couldn’t establish a strong position.
“Uber's move may be more tactical rather than strategic as it aims to put more pressure on a key profit source ahead of JET's completion of GRUB deal. We believe that it is difficult to scale and build a profitable logistics business in Germany.”
JET has around a 97% market share in Germany, UBS noted, having grown restaurant inventory 36% last year to circa 26,000 restaurants, with its Scoober model rolled out in Berlin and 60% growth in the delivery business seen un 2020.
In the first quarter, JET saw logistics in Germany grow 124% to 3.1m, around 8% of total orders, while total orders grew 77%.