Just Eat Takeaway.com NV (LSE:JET, NASDAQ:GRUB) faces a lively annual general meeting (AGM) after massively disappointing last week with its first-quarter trading update.
Performance in the quarter was “not good”, said Barclays, using some classic British understatement.
Gross transaction value guidance was cut from the mid-teens (in percentage terms) to mid-single-digit and Barclays said it is becoming increasingly evident there is some trade-off between top-line growth and the drive towards profitability in 2023.
Nevertheless, the broker retains its ‘overweight’ (OW) recommendation, saying its rating is “not predicated on this being a clean operational story”.
Rather, it thinks this is a sum of the parts (SOTP) story with corporate action the key to unlocking value.
“Two shareholders (Lucerne and Cat Rock) have now gone public ahead of the May 4 AGM with proposals to vote against the re-election of certain personnel on the Supervisory and Management Boards. We can't be certain of the outcome here, but with a concentrated register, apparent investor frustration and a weak share price, the AGM could be noisy. As we have written now for essentially a year, we think this stock will only really work with a hard catalyst on corporate action - we remain optimistic corporate action on asset sales is still realistic,” Barclays concluded.
Cat Rock, an activist investor based in Connecticut, USA, published an open letter accusing Just Eat's management of providing a misleading outlook before launching its ill-advised takeover of US rival, Grubhub, in 2020. Cat Rock said the takeover had "torpedoed the company's share price" and destroyed around €16bn of value in less than two years.
“JET shareholders suffered this massive destruction of equity value despite the company growing +97% organically and maintaining clear market leadership across many of the world’s largest economies,” Cat Rock Capital carped.
“We believe JET’s equity value has decoupled from its fundamentals because of a complete loss of trust in the Management and Supervisory Boards’ capital allocation and financial management.
“We believe the bulk of the value destruction occurred because JET management gave investors a misleading financial outlook in advance of the two Grubhub shareholder votes, leading to two massive profit downgrades in 2021 and shattering investor trust in management,” the open letter said.
The activist investor is seeking the defenestration of the current chief financial officer, Brent Wissink and the appointment of a new supervisory board to refocus the business on Europe at next week’s AGM.
Shares in Just Eat were up 3.1% at 2,186p in late morning trading on Tuesday.