Some investors are clearly living in a parallel universe
Having watched the phenomenal “Avengers: Endgame” this weekend (no spoilers here), I did take a moment to think about parallel universes.
To put it bluntly, it doesn’t take a genius like Tony Stark to work out that many market commentators are living in a parallel universe – that is, they can’t remember what happened 20 years ago.
Now I very rarely get emotional at the cinema, but I did cry a tad watching the Avengers.
Though not nearly as much as I cry inside every time I read yet more sycophancy and ingratiating copy from my peers about companies that have never made money, show no signs of making money anytime soon, and who claim to have reinvented the wheel.
Companies such as Delivery Hero, which is one of the pioneers from the revolutionary world of, wait for it… food delivery. To recap, Delivery Hero is a Berlin-based online food delivery company. It has an app that allows people to, yes you got it, order takeaway food online. Apologies if I’m missing some amazing subtlety in interpretation of the business model, but I only have 450 words for this piece of copy, so time is of the essence – a bit like when you are trying to deliver pizza.
Taking a step back before I go on, Canada, Wall Street and others are all looking for the next big thing – the next Amazon everyone can get behind and pump billions into the momentum trade.
It’s a bit like 20 years ago in the heady days before the dot-com bubble burst. Here in 2019, everyone is trying yet again to find a similar cause celebre, with or without sound financial rationale.
So back to pizza, Delivery Hero’s first-quarter statement was only three pages long, but it seems that the market watchers only read the front page, otherwise known as the executive summary (the bit where companies put all the stuff they want you to read).
In this case, it was loaded with fab numbers, such as 93 per cent first-quarter revenue growth. Wow, I thought, this company must be making bundles.
But apparently, their EBITDA, or earnings before everything, was moving aggressively in the other direction last year. To be fair, this was “hidden” on page three of this mighty three-page release, so how can anyone be expected to read the information that far back?
So here’s the number my peers failed to reach: EBITDA for 2018 was a loss of €141.6m – more than double the 2017 loss of €69.8m. In its outlook for 2019, the company expects to make a loss of between €270m and €320m.
Maybe I’m missing the point, and the first quarter of 2019 has turned in a massive profit, reversing these big losses. In that case I wonder why this wasn’t sung from the rafters on page one of the release? Anyone? Mr Stark? Doctor Strange? The Hulk?