Amazon is warming up for food delivery
The everything store wants apparently to become the everything machine running the consumer economy. Amazon has announced this morning that it will receive a 2% option (warrants) in the US based food delivery company Grubhub, which is owned by Just Eat in Europe, in exchange for Amazon’s US Prime members getting a 1-year membership for the food delivery service. Depending on the performance of this partnership Amazon can increase its stake to 15% of Grubhub.
Shares in Just Eat, the parent company of Grubhub, are up 20% today as the market is betting that these type of partnership can reignite growth for Just Eat which is seeing increased competition. Just Eat revenue is expected to grow 32% in 2022 down from 120% in 2021 reaching €5.9bn, but the business is still not generating a positive operating income and as a result its shares have been punished during the interest rate rally.
For Amazon the economic engine is getting more and more convoluted and we do not see the big upside for Amazon in this deal. If anything it just makes the business more muddy and we still prefer that Amazon spins out its cloud business in a separately publicly listed company.