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How to Get Rich Investing in Stocks by Riding the Electron Wave

How Did the Takeaway Apps Stocks Perform During the Lockdown?

Companies / Sector Analysis Jul 23, 2020 - 04:28 PM GMT

By: Submissions

Companies

With many countries in lockdown or partial lockdown because of the pandemic, many businesses have been faced with problems having a noticeable impact on their financial status.

As many things change and a new normal emerges, businesses need to adapt. One industry that has traditionally thrived on high customer traffic is the food service sector. But as lockdowns keep customers at home, can restaurants survive on takeaway alone?


Reasons for Demand

On one hand, during the lockdown many people have more time for cooking at home on their own. This could negatively impact the global demand for prepared meals. Nevertheless, reduced options for entertainment & outings can also drive up takeaway orders.

Government regulations during the lockdown have made the public much more conscious about social distancing. In light of this, many would-be eat-in diners are opting for home deliveries for the first time.

Many restaurants have been locked down due to the pandemic. However, with special permits and dispensations, they can still prepare and provide takeaway food to customers. Consequently, many takeaway companies are thriving, largely due to home deliveries.

These include companies such as Uber, Deliveroo and Grubhub.

Increase in Usage

As restaurants begin to migrate to takeaway business models, few have the infrastructure in place to handle deliveries and mobile orders. Therefore, many companies have turned to apps, which already have fully operative takeaway infrastructures, like apps & drivers.

Using data available from Google, Betway researched some of the world’s most popular takeout food delivery, and unsurprisingly, McDonald’s dominated searches for branded fast food companies.

Up until April 2020, companies like Just Eat and Uber Eats saw drops in usage.  Not just in the UK, but Europe as well.  But as of May 2020, many companies have seen tremendous increase in shares, stocks and valuations.

Uber Eats had an increase of 3.41% in the usage of the app. The company has also seen a 50% increase in stock price since March, though still -25% year-on-year. Domino’s Pizza had a rise of 7% since January. Its stock has soared 37% since its March nadir, reaching all-time highs.

Since a March low of 67.5, Just Eat Takeaway has climbed nearly 50%, flirting with a 100 all-time high. Ocado, partly owned by Marks & Spencer, surged by 31%.  On the FTSE 100, they are currently the fourth-best performer.

On average, customers are using takeaway delivery 2.3 times a week, whereas before it was 2.1 times. These are mostly over the weekend.

This is great news for investors. If you wanted to invest in pandemic-proof stocks, these companies have a lot of growth potential. Just make sure that the parent company of the delivery app is listed on the stock exchange.

After Lockdown

Chances are that after the lockdown, this trend will continue. There are, however, worries regarding lockdown regulations easing up. This could effectively erase the gains made by takeaway-centric apps and businesses.

However, it seems probable that customers in the future will stick to home deliveries. As health awareness increases, and with the virus seemingly going nowhere, takeaway seems like a safer option for most.

Light at the end of the tunnel

The world has entered uncharted waters in this pandemic. Companies and investors need to know that the food industry will come out the other side forever changed.

Whether this means socially-distant eat-in restaurants, universal takeaway, or something else entirely, is anyone’s guess. In the meantime, keep an eye on those takeaway app stocks for more growth.

By Ben Jardine

© 2020 Copyright Ben Jardine - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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