London’s own leader in the sharing economy, JUST EAT (LSE:JE.), was given initial coverage today by U.S. broker, Jefferies. Jefferies rated JUST EAT as a “buy.” That ignited a sharp increase in the JUST EAT share price, currently up more than 10% to 298.20.
JUST EAT is the world’s largest online marketplace for restaurant delivery in the many-to-many sector of the sharing economy. It now delivers meals on-demand from over 40,000 restaurant partners to 6.9 million active users in 13 countries.
Jefferies explained that the many-to-many model is “an underpenetrated and material opportunity” for digital ordering of food for delivery. In terms of a digital network business model, Jefferies added that “JUST EAT is arguably the most attractive stock in the universe.”
With JUST EAT shares now trading near 300, Jefferies has set a target of 450.00, which, if correct, provides an excellent investment opportunity. On the other hand, JUST EAT CFO Michael Wroe observed that “The share price is, to a large extent, out of our control. We’ll focus on growing the business, making it more profitable and, hopefully, the share price will then follow.”
JUST EAT is just five days shy of being listed on the LSE for five months, with its initial entry on 08 April 2014 at 260.00.
On 12 August, JUST EAT published its maiden Interim Results followed by a share price increase from 219.50 on the 11th to 262.00 on the 13th. During the six-month period ending on 30 June 2014 covered by that release, JUST EAT reported:
- Revenue up 58% to £69.8 million (H1 2013: £44.1 million)
- Orders up 50% to 27.5 million (H1 2013: 18.3 million)
- Underlying EBITDA up 591% to £15.9 million (H1 2013: £2.3 million)
- Basic earnings per share up 200% to 1.2 pence (H1 2013: 0.4 pence)
- Adjusted basic earnings per share increases to 2.1 pence (H1 2013: loss 0.1 pence)
- Operating cashflow of £15.4 million, (H1 2013: £8.7 million), representing 97% of Underlying EBITDA
The company also announced that orders from mobile devices exceeded 50% of all orders for the first time in company history and that it had processed £465 million in orders, up from £311 million in the same period year on year.
CEO David Buttress commented at the time that “We are accelerating our mobile strategy across all our geographies and in the UK over 56% of orders are already being placed via apps or through a mobile device. It has been an exciting period for JUST EAT, with our IPO in April and inclusion in the FTSE 250 in June.”
JUST EAT’s UK business grew by 69% over the first have of 2013 to £51.9 million. Revenue in Denmark, its second-largest market increased by 12% to £6.5 million. All others, which includes its key markets of Ireland, France, Spain and Canada, generated a healthy 51% revenue growth to £11.3 million.
Leveraging the use of digital communication via mobile devices is stimulating the growth of a new, often disruptive, economic model. The folks at JUST EAT are at the leading edge of the curve, thereby proving the efficacy of the model.
My advice is to become keenly aware of this evolution as traditional business models may be taking a back seat as the collaborative models begins driving the economy.
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