Delivery Hero has no business in the Dax

Hardly any other start-up makes it clear that the hype surrounding tech companies is now over. However, the exclusion of the delivery platform operator from the DAX is also overdue for other reasons.

Delivery Hero will be removed from the DAX on June 20. One reason is the price corrections in tech shares. Investors' expectations were too high and the company's actual key figures too poor. The fact that the delivery platform operator now has to leave the most important German index is simply logical.

Two years ago, when Delivery Hero joined the DAX, the world was a different place and the start-up scene was delighted. Finally, a young company that had made it to the top - and at least the start-up's share price performance in 2020 and 2021, i.e. in the middle of the peak phase of the coronavirus crisis, proved these voices right. The company's share price rose sharply and its market capitalization exceeded 36 billion euros at times. Those who invested in tech shares benefited from the hype. But as early as February of this year, the company's share price plummeted by 30 percent. Investors reacted to the fact that the start-up's losses were higher than expected. Today, the market capitalization is only just over 8.3 billion euros.

Delivery Hero recently made huge losses

Admittedly, Delivery Hero is by no means the only tech company struggling with falling share prices. In view of rising inflation, there is a sell-off mood on the stock markets. Technology stocks are under pressure worldwide.

Delivery Hero, however, is also highly loss-making. Although the start-up continued to grow in 2021, losses are also increasing - the loss before income taxes amounted to 958 million euros. With company figures like these, it would no longer be possible for the company to be listed on the DAX. After the Wirecard case, Deutsche Börse changed its conditions: Dax members must show positive earnings before interest, taxes, depreciation and amortization (EBITDA) for at least two years. Delivery Hero is a long way from achieving this.

CEO Östberg stayed away from the shareholders' meeting

However, such company figures are not the only reason why the company has no place in the Dax. At the beginning of the year, CEO Niklas Östberg did not even consider it necessary to answer questions from his shareholders - he simply stayed away from a shareholders' meeting. He subsequently defended the move on Linkedin. "I like to focus on what creates the most value for shareholders and didn't think prepared questions and answers provided the most value. If you as a shareholder have a question, I am happy to answer it at any time, not just once a year," he wrote.

Of course, Östberg does not have to attend such meetings. But it is also not written anywhere that he only has to read out answers there. "A virtual AGM does not have to be limited to reading out prepared questions and answers. You could give your shareholders the opportunity to ask questions live - as a technology company, that shouldn't be too much of a challenge," commented well-known investor Christian Röhl at the time, justifying Östberg's decision. Respect for shareholders looks different, but perhaps Östberg will now learn this in the MDax, the second stock market league.