Amazon's Deliveroo investment is a bad sign for Uber — shares of an Uber Eats rival are tanking

  • Amazon has led a $US575 million financing round into Deliveroo, one of Uber Eats’ archrivals.
  • Shares in Just Eat, another meal-delivery competitor in the UK, dropped 7%.
  • Uber Eats and Just Eat had higher revenues and more restaurant partners than Deliveroo at last count.
  • Watch Uber,Amazon, and Just Eat trade live.

Uber’s week just got worse. Days after the ride-hailing giant went public and saw its stock plunge 8% on its first day of trading, Amazon has invested in Deliveroo, the archrival of Uber’s meal-delivery service, Uber Eats, in the UK.

The news sent shares down 7% in Just Eat, wiping more than £360 million off the market cap of the third major food-delivery company in the UK.

Amazon led a $US575 million financing round into Deliveroo, potentially making the e-commerce giant one of the meal courier’s largest investors. It represents a bet that Deliveroo – which has raised just over $US1.5 billion to date – can take on and topple Uber Eats and Just Eat, despite their larger sizes.

Deliveroo works with more than 80,000 restaurants and takeaways, and operates in more than 500 towns and cities across 14 countries including Australia, Hong Kong, and the United Arab Emirates. Just Eat has more than 100,000 restaurant partners across 13 countries, according to its latest earnings. Uber Eats is the biggest of the three with more than 220,000 restaurants in more than 500 cities on its platform.

Amazon’s newest partner had the lowest sales of the three in 2017, according to its latest Companies House filing. Deliveroo posted revenue of £277 million ($US354 million) in 2017, while Just Eat reported £546 million ($US698 million) and Uber generated $US587 million. However, subtract incentives and referral fees and Uber’s net revenue was $US363 million that year.

Deliveroo posted a pre-tax loss of £185 million in 2017, dwarfing Just Eat’s £76 million loss that year. However, Just Eat swung to a pre-tax profit of £102 million in 2018. Uber doesn’t break out profits for Uber Eats, but the platform only earned about $US1.5 billion in revenue on $US7.9 billion of orders in 2018.

Amazon joined existing Deliveroo investors T Rowe Price, Fidelity, and Greenoaks Capital in the Series G funding round. Deliveroo plans to use the additional funds to hire more engineers at its London headquarters, expand into new areas to reach new customers, and ramp up “Editions” – its delivery-only super kitchens. Even with Amazon’s backing, Deliveroo will have its work cut out to triumph over Uber Eats and Just Eat.

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