When a CEO is spending millions on company stock, it’s often worth taking a closer look. CEOs tend to be way ahead of analysts when it comes to business trends and their stock purchases can provide valuable trading signals.
In this report, we are going to highlight a large CEO purchase at Delivery Hero AG (DHER:GR). Delivery Hero operates the largest global food delivery network (outside of China). Present in over 50 countries, it provides delivery services in over 700 cites. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €27.0 billion.
Delivery Hero: Insider Buying
Our data shows that during October, Delivery Hero CEO Niklas Östberg has purchased stock on two occasions. On October 6, the insider bought 48,200 shares at a price of €103.57 per share. Then, on October 7, he added another 38,200 shares at a price of €104.66 per share. Combined, these trades cost the insider a total of €8.99 million.
This trading activity is worth highlighting due to the fact that Mr. Östberg has made some well-timed trades in the recent past.
Back in March, we noted that the insider had spent just over €5 million on Delivery Hero stock when it was trading at €107. Over the next two months, the stock rose as high as €142 on the back of strong results and broker price target increases.
It’s worth noting that Mr. Östberg founded Delivery Hero in 2011. Before this, he co-founded Pizza.nu. So, it’s fair to assume he has a good understanding of the business and the industry.
Strong H1 Results
Delivery Hero recently posted a strong set of H1 results.
On a pro-forma-basis, the company processed 1.4 billion orders during the period (H1 2020: 760 million), corresponding to a year-on-year increase of 84%. The group's GMV grew by 78% year on year to €16.2 billion (H1 2020: €9.1 billion), while total segment revenue increased 109% year on year to €2.9 billion (H1 2020: €1.4 billion).
In Europe, adjusted EBITDA improved from negative €7.9 million in H1 2020 to positive €1.0 million while in the MENA region, adjusted EBITDA increased from €18.8 million in H1 2020 to €65.0 million in H1 2021 on a pro-forma basis. Overall adjusted EBITDA/GMV margin improved from -3.6% in H1 2020 to -2.1% in H1 2021 despite expansions into new verticals and markets.
Looking ahead, Delivery Hero said that it expects its full-year GMV to reach €33 to €35 billion (2020: €12.4 billion) with a total segment revenue outlook at €6.4 to €6.7 billion (2020: €2.5 billion), and an adjusted EBITDA/GMV margin at around -2% for the financial year 2021.
Given this strong level of growth, we see the insider buying here as a bullish indicator.