Markets What’s eating meal delivery stocks? By Reuters June 1, 2022, 1:39 PM Things couldn't be more different now, with the likes of Deliveroo, Just Eat Takeaway and Delivery Hero underperforming Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. Whatever happened to these lockdown winners? Meal delivery companies had a great run in the early days of the COVID-19 epidemic and strived as growth and tech stocks led the rebound from the COVID-19 market crash. Things couldn’t be more different now with the likes of Deliveroo, Just Eat Takeaway and Delivery Hero grossly underperforming the pan-European STOXX 600. One might think that the underperformance is due to portfolio managers quickly rotating out of tech and growth given the new investment paradigm of high yields and inflation. That could be part of the explanation but meal delivery groups are actually also doing quite poorly in comparison with Europe’s tech index. HSBC analysts believe that growth prospects is a key issue for investors as these platforms now turn their focus to profits rather than gaining market share at all cost. “Through the pandemic, platforms have pursued growth at the expense of all else and have paid the price, as this undermined investor confidence in business models, management and liquidity”, the bank’s analysts wrote in a note. “We struggle with the notion that better profitability will not crimp growth”, they add, noting that how meal delivery customers will adjust their spending to rising inflation remains to be seen. Their depressed stock prices however already reflects much of these issues and there could be some long term value to be seized, HSBC argued. It has a ‘buy’ rating on Just Eat and a ‘hold’ on Deliveroo and Delivery Hero.