The company was the only Dax member that had never made a profit.
(Photo: Max Threlfall/ Delivery Hero)
At first glance, it’s an embarrassing failure. After less than a year, Delivery Hero has to leave the Dax again. Since the rise in the stock market index, the share price of the delivery service has lost two-thirds of its value and has fallen from 124 to a good 36 euros.
Sure, a success story looks different. In the short time it was a member of the Dax, the management learned a lot. But that is precisely why the relegation is not a setback for the company, but rather a blessing.
From the start, Delivery Hero was a foreign body in the Dax. It wasn’t just the only company that had no business in its home market of Germany. It was also the first that has never made a profit.
As a result of its promotion to the first stock exchange league, expectations were suddenly placed on the company that it could not meet – and for which it was in no way prepared.
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Basically, the mass of investors didn’t understand Delivery’s business model, and the management didn’t manage to explain its strategy sufficiently. For a growth company, it may well be a sensible strategy to sacrifice profit first in order to establish a dominant position in the market – and then reap the rewards. Amazon also made losses long before it became a retail horror. A Dax group, however, is apparently not allowed such a dry spell in Germany.
No experiments desired
In addition: Delivery Hero boss Niklas Östberg did not understand that you can no longer run a Dax group like a start-up without being punished for it on the stock exchange. An example of this was the failed return to the German market last year. After just six months, the delivery service in Berlin was discontinued again under the Food Panda brand.
In the first stock market league something like this meets with a lack of understanding. In the agile world of start-ups, on the other hand, it is completely normal to simply try out a new idea, to invest money in a business area and, if it doesn’t work out that way, to stop the whole thing after a short time. That’s another reason why Östberg apparently didn’t realize that he should have explained this much better.
The company lost a lot of trust in this way. But with the descent from the Dax, Delivery Hero is stepping out of the bright spotlight again. It now has the chance to calmly show whether it can achieve the goals that many analysts still believe it can achieve. And then there is a good chance that the share price will recover significantly.
More: Delivery Hero increases platform sales by more than 50 percent – but investors are completely unsettled