The food delivery industry in the United States has grown into a behemoth and although the margins are extremely thin, investors are willing to bet billions on some of the biggest food delivery companies. At this point in time, companies are fighting among themselves to gain supremacy in this space and competition is heating up as they look to grab market share from each other.
Two of them are ParcelPal (PKG) (PTNYF) and GrubHub (GRUB Stock Report), while the others include private companies DoorDash and PostMates. Not long ago, GrubHub used to be the biggest name in this sector but now the company is feeling the heat of heightened competition.
ParcelPal Technologies (PTNYF) (PKG)
The opportunity that ParcelPal (PTNYF) (PKG) may be presenting now draws comparisons to the way early investors had an opportunity with companies like Uber and GrubHub (GRUB) before they went mainstream in the US. GrubHub priced its initial public offering at $26 per share and now trades nearly 3x that price just as this market is beginning to heat up!
The difference withParcelPal (PTNYF) (PKG) is that it is going directly after the international markets that have very limited access to technology like this right now. In fact, the major players in the industry are just beginning to get their feet wet with beta testing; they aren’t even full speed yet.
This is just one slice of ParcelPal (PTNYF) (PKG)’s directive to take on “sin-dustries” (sin industries like alcohol, tobacco, and marijuana). With the budding market in Canada alone proposed to reach somewhere in the billions of dollars, cannabis presents a more near-term opportunity for ParcelPal.
In its second quarter, the company reported revenues of $325 million, which managed to exceed expectations but the company projected lower profits for the full year. That resulted in a 12% dive in the stock. The growth of the sector has seen these four companies accounting for 80% of the industry but more competition is on its way as more and more firms set up shop in order to attract the billions of dollars in venture capital that is one offer.
The biggest firms are now spending more money than ever in order to ensure that they do not lose out on market share to the new companies that are being set up. However, the large amounts of money that are being pumped into the sector is going to result in the establishment of new companies. In 2018 alone, as much as $4.8 billion was invested by venture capital outfits in the food delivery industry and the money was spread across a total of 60 deals.
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