Just Eat delivers £1.5bn valuation

The online takeaway service is worth more than 100 times its earnings. Is it dotcom madness?

by Elizabeth Anderson
Last Updated: 22 Apr 2014

Priced at 260p a share, it's at the top of the range Just Eat was seeking, and more than what the company wanted in January.

It means the online takeaway service was valued at almost £1.47bn when it made its debut on the London Stock Exchange this morning. That's 100 times more than Just Eat's underlying earnings of around £14m, a crazy multiple unhappily reminiscent of the original dotcom bubble of the late 90s. 

The company had originally set an initial public offering price range of between 210p and 260p per share, valuing the company between £1.2bn to £1.47bn, but investors were impressed by the firm's rapid growth and experienced management team.

Shortly after the markets opened, shares hit 285p but dropped down to 274p by mid morning.
Just Eat's successful stock market debut could be the tip of the iceberg if recent IPOs are anything to go by. When fashion website Boohoo.com came to the market, its stock rose 40% on its first day of trading, although has now settled to around 10% more than its opening price of 50p a share.

Meanwhile, online appliances seller AO.com debuted in February with shares surging 44% above their offer price on their first day of trading, while discount retailer Poundland closed with a valuation of £925m when it first debuted on the London Stock Exchange in March.

Just Eat's float makes a total of seven technology IPOs in London this year, raising £1.3 billion; 30% more than the 2013 total, stoking fears that the UK could be in the grip of another dotcom bubble.
Just Eat said it will receive £100m from the float, while the rest will go to its venture capital backers (SM Trust, Index Ventures, Vitruvian Partners, Redpoint Ventures and Greylock Partners), as well as senior management, employees and former staff.

The company was founded in Denmark in 2001 before moving to London five years later, and it now operates in 13 countries. It handled more than 40 million takeaway orders last year, and makes between 10%-12% on each order made.

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