Market Loop - Just Eat take $3bn hit on US business

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4th August 2022

Bite-sized business news from the UK and beyond

Good morning Yesterday American share trading platform Robinhood, infamous for the ‘meme stock’ frenzy of 2021, announced it would layoff 23% of its workforce with affected workers notified…via Slack.

The company grew rapidly during the pandemic as DIY investing flourished but that growth has lost steam. It went public in July 2021 at $38 per share, and its stock jumped as high as $85 in its first month of trading. However, the stock quickly declined. Shares of Robinhood are down 48% year to date at around $9.

Today's stories

Just Eat takes $3bn hit on US business
Stephen King testifies in publishing mega-merger trial

FOOD
Just Eat takes $3bn hit on US business

What happened?
Yesterday Just Eat Takeaway (JET), the food delivery giant made by the merger between British Just Eat and Dutch Takeaway.com, announced it had slashed the value of its US arm Grubhub by half.

Pandemic winner slowing down
During the pandemic JET more than doubled in size as consumers ate more at home while restaurants were closed. But in the six months to June 2022 the volume of orders fell 7% to £509m compared to last year as the world reopened post lockdown.

Demand fell in all regions, with the largest drop in the biggest market North America. The UK and Ireland performed worse than other European regions with a 13% drop over last year. All this meant the company reported a loss of £112m in the period.

Poor expansion
JET acquired Grubhub in June 2021 for $7.3bn but since then the investment has soured and $3.1bn has been written off the value. Barely a year into ownership Grubhub has been put up for sale and, under heavy shareholder pressure, JET is ready to sell at a hefty loss.

The company also announced it planned to re-appoint COO Jörg Gerbig following allegations of personal misconduct at a corporate event. JET wouldn’t comment on details of the allegation citing privacy concerns.

Zooming out: JET and its rival Deliveroo have seen their share price slide by over 75% since the start of 2021. The food delivery industry has struggled to maintain the lockdown-related growth as consumers return to the high street and now the cost of living crisis has made consumers more wary of spending on takeaways.

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MEDIA
Stephen King testifies in publishing mega-merger trial

What happened?
This week horror novel legend Stephen King testified against a $2.2bn merger of publishers Penguin Random House and Simon & Schuster saying it would harm competition.

How did we get here?
In the world of book publishing, a so-called ‘Big 5’ of publishers reign supreme: MacMillian, Harper Collins, Hachette Book Group, Simon & Schuster and Penguin Random House (itself the result of a 2013 merger that ended the era of a ‘Big 6’).

When Penguin Random House announced in 2020 that it had agreed to acquire Simon & Schuster, there was backlash from authors and industry leaders that in the new landscape the merged company would be too dominant – controlling around half the market - and stifle competition. As a result the US government is investigating the deal and began an antitrust trial on Monday.

Horror author Stephen King took the stand on Tuesday as a witness stating consolidation is bad for competition in the industry. The bestselling author, mainly published by Simon & Schuster, testified to his belief large publisher mergers lead to lower pay for authors.

The government argued the deal would negatively affect authors with fewer bidders for their work, resulting in lower author advances.

The Penguin Random House and Simon & Schuster argue it would allow both companies to pool their resources to make the industry more competitive, offering higher advances. The two publishers will still operate separately and can bid against each other for book deals.

Up next: the trial is expected to last up to three weeks and includes testimony from top book executives throughout the publishing world.

Stat of the day

Tiger Woods reportedly turned down over $700m to join the controversial Saudi Arabia backed LIV Golf Tour

Interesting links from around the web

The rise of ‘quiet’ quitting
The ultimate cover letter checklist
6 tips for better spreadsheets

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Market Loop - Just Eat take $3bn hit on US business

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