Are Delivery Firm Stocks Overvalued? They Deliver Great Food, but Not Profits
A look at how unprofitable firms are valued
Q. What’s worth almost half a trillion dollars and had operating losses of over 12 billion dollars last year?
A. Nine publicly-traded delivery firms, including Uber and DoorDash.
Are investors in delivery firm stocks partying like it’s 1999, just before the dot-com bubble burst? Or are these stocks fairly priced? I’ll review the evidence including the revenues these firms are generating, the losses that they are incurring, the expected growth in revenues, and their values relative to their revenues, compared with some well-known growth stocks. I’ll also examine the challenges of valuing stocks that aren’t profitable.
Public Delivery Firms
Here’s a brief business description of each of the nine firms according to S&P Capital IQ (and the primary country in which each operates), listed in order from the smallest market capitalization to the largest:
- Deliveroo (UK): Operates an online food delivery platform
- Just Eat Takeaway (Netherlands): Operates an online food delivery marketplace
- Lyft (US): Operates a peer-to-peer marketplace for on-demand ridesharing
