AlsterResearch Update: Delivery Hero - Investment keeps competition in check

Delivery Hero SE (Update)   Retail MCap EUR 29bn   BUY PT EUR 134.00 (+17% potential)   Delivery Hero invests in on-demand grocery delivery company Gorillas to further advance the quick commerce industry. We think this helps keeping competition in check.   Read

What’s it all about?

Delivery Hero (“DH”) announced that it is taking a minority stake in Gorillas, a direct competitor for its quick commerce activities. Funding a direct competitor may seem odd, but in our view, the investment makes sense. US-competitor Doordash just recently invested in Flink, the other major player in German on-demand grocery delivery. We see Delivery Hero’s investment as a maneuver to keep competition in check. Further, the investment is an entry point for a possible future consolidation of the market. We confirm our DCF-based TP of EUR 134.00 and remain with BUY.