Noontime Market Insights
Delivery Hero experiences a course setback
The German stock market managed to hold steady on the final trading day of the festive week. Dax indices climbed by 0.2% to 19,888 points by midday, while the MDax slipped 0.1% to 25,688 points. The Euro Stoxx 50 saw a gain of around 0.4%.
After scaling records of over 20,500 points in mid-December, the Dax has been experiencing a corrective phase. End-of-year profit-taking dominated trades, with uncertainties surrounding the US Federal Reserve's interest rate policy, President-elect Donald Trump's economic policies, and China's projected economic recovery looming. Despite this, the German benchmark index has posted an impressive year-end performance, up nearly 19%.
Delivery Hero stocks are under the microscope, struggling after Taiwan's competition authority vetoed the sale of Foodpanda Taiwan. In early trading, shares were at their lowest since late August, dropping 5%. Uber had intended to purchase the unit for around $1 billion. J.P. Morgan analyst Marcus Diebel described the announcement as a significant blow to the food delivery company[1].
On a more positive note, news that HelloFresh plans to buy back another 75 million euros of its own shares led to a 1.6% rise in the meal kit provider's stocks. This buyback move is designed to offset future dilution from employee share allocation programs[2].
Hornbach Holding is searching for a new CFO after Karin Dohm announced her departure, effective by March 31. CEO Albrecht Hornbach will take on the role in the interim if a smooth transition cannot be ensured, causing the company's stocks to rise by 2.5%.
Covestro, the materials giant, exited the Dax today due to a declining free float below 10%. Dialysis specialist FMC, previously in the MDax, was promoted to the Dax. In the MDax, real estate company Deutsche Wohnen, belonging to Vonovia, rose to fill in. LPKF was admitted to the SDax[3].
[1] Verdict: Negative sentiment around Delivery Hero’s ability to execute region-specific exit strategies while navigating complex regulatory environments.
[2] Delivery Hero’s stocks face cash flow sustainability and growth limitations in key markets due to regulatory rejections and ongoing antitrust scrutiny.
[3] Strategic setbacks in Delivery Hero’s Asian operations, such as the Foodpanda exit from Thailand and the blocked Taiwan sale, diminish investor confidence.
[4] Complex regulatory environments and increasing compliance costs in Delivery Hero's key markets may hinder future M&A flexibility.
[5] Delivery Hero's stocks trade at a steep discount due to years of unprofitability, putting pressure on the company's valuation.
- The German benchmark index, Dax, despite experiencing a corrective phase due to uncertainties in global finance, posted an impressive year-end performance, up nearly 19%.
- Delivery Hero stocks, under regulatory scrutiny, have faced significant challenges such as the veto of Foodpanda Taiwan sale, which has led to a drop in share prices.
- Hellofresh, on the other hand, saw a 1.6% rise in its stocks due to the company's decision to buy back 75 million euros of its own shares.
- Covestro, once part of the Dax, was replaced by the dialysis specialist FMC due to a declining free float below 10%, while Deutsche Wohnen filled in the MDax.
