Wednesday's Headlines: Amazon Takes a Bite of Grubhub
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
nCino (NCNO) 12.0%
Teladoc (TDOC) 11.4%
Bill.com (BILL) 11.3%
Trupanion (TRUP) 10.7%
Moving Down ⬇️
Trip.com Group (TCOM) -6.4%
2U (TWOU) -5.0%
Markel Corp (MKL) -2.0%
Coca-Cola (KO) -1.7%
Here are the stories that you need to know ahead of market-open today, Wednesday, the 6th of July.
Amazon takes a bite of Grubhub 🍽
Amazon (AMZN) has struck a deal with Grubhub to bring its food delivery service to Prime Members in more than 4,000 American cities for free. The deal was announced as part of Amazon’s Prime Day Promotion on Wednesday. Amazon has a similar deal with Deliveroo in the United Kingdom and Ireland.
This was a rare spot of good news for Grubhub’s parent company Just Eat Takeaway, which has struggled to manage the fledgling service in the wake of increased competition from Uber Eats and Doordash. Just Eat picked up Grubhub last year for more than $5.8 billion in shares and has faced nothing but criticism from investors and analysts since.
Just Eat’s stock is down more than 70% this year despite management promising to sell Grubhub. Outsiders are skeptical the company will be able to recoup its investment.
But, if all goes well with Amazon, this may just be the beginning for Grubhub. Amazon received 2% of Grubhub’s shares and will receive an additional 13% of shares if the deal brings Grubhub enough customers.
According to Just Eat’s management: “The agreement is expected to expand membership to Grubhub+, while having a neutral impact on Grubhub's 2022 earnings and cash flow, and be earnings and cash flow accretive for Grubhub from 2023 onwards”.
Just Eat’s stock, which is listed on the Euronext exchange in Amsterdam, is up more than 15% so far today. Amazon’s stock seems largely unaffected by the deal.
Exxon Profits Set To Skyrocket ⛽️
A securities filing on Friday indicated that Exxon Mobil could be in line for another record quarter. The filing suggests that the oil company is expecting a potential profit of up to $16 billion — a mark that would beat its last record quarter of $15.9 billion back in 2012.
Energy prices have soared this year and margins have continued to grow stronger for the companies providing oil and fuel. According to an Exxon statement, “high energy prices are largely a result of underinvestment by many in the energy industry over the last several years and especially during the pandemic.”
The wider oil industry in the U.S. has recently been criticized by the White House for its alleged profiteering and renewed calls for a significant profit tax have surfaced in light of continuing price rises. There have also been calls for companies like Exxon to reinvest profits into equipment, strengthening their workforce, and reducing consumer costs, as opposed to stock buybacks.
Right now there doesn’t appear to be an end to the global fuel crisis we currently face, meaning that Exxon is likely to continue to see profits soar. Wall Street analysts have adjusted revenue estimates accordingly, and are widely expecting Exxon to benefit massively from the current situation.
1Life Healthcare Considers Buyout 🏥
Shares of 1Life Healthcare — the parent company of the One Medical primary care clinics — spiked close to 25% yesterday after Bloomberg reported that the company was considering offers of a takeover.
According to insiders, 1Life had drawn preliminary interest from CVS Health Corp regarding a potential acquisition. Although it appears that these talks with CVS are no longer active, the interest has encouraged management to weigh up other potential suitors. No other companies were specifically mentioned and all ongoing talks are said to be at a very early stage.
1Life Healthcare was founded in San Francisco in 2007 and has grown into a chain of close to 200 membership-based primary care practices across 25 US markets. In the company’s most recent quarterly report, it had a total membership count of 767,000, while the company pulled in revenue of over $623 million in the last year.
However, the company has faced a lot of controversy too. Last year, One Medical found itself at the center of a congressional investigation over reports that it was fast-tracking COVID-19 vaccines for family and friends of executives, as well as wealthy clients that weren’t yet eligible for the vaccines yet. Ultimately, the probe found that One Medical “exploited its access to scarce coronavirus vaccines to promote its business interests and grow its membership base”.
This, along with the wider market rotation against high-growth stocks, has precipitated a rapid decline in 1Life’s stock price — down some 85% from its all-time highs and 25% below its IPO price.