Acquisition potential is a major factor driving capital allocation. One space that has started to show signs of a potential wave of consolidation and dealmaking is the food delivery sector. This was highlighted this week when DoorDash Inc. (NYSE:DASH) announced that it is buying Wolt, a Helsinki-based food delivery startup, in an all-stock transaction valued at $8 billion.
The pandemic was a huge boost to the space. But companies in food delivery have models predicated on a low-margin high-volume battle for market share. People became more accustomed to ordering their meals and groceries online and then finding them sitting on the front step an hour later. It was a massively important exercise in market share penetration for the whole idea of online ordering and delivery of food.
But delivery fees are contentious and a major point of competitive angst – if there are more companies out there competing which each other for delivery business in the food space, then market forces will drive fees lower as each tries to compete for new customers. But, with margins already thin, too much competition would ensure the entire industry becomes unviable.
Given this scenario, analysts have been widely anticipating a lot of consolidation and acquisition.
Once a new company pops onto the radar with a growing piece of a market or region, there’s a good chance it is going to get snapped up by one of the bigger players, such as Uber Technologies Inc. (NYSE:UBER), Just Eat Takeaway.com (Nasdaq:GRUB), Lyft Inc. (Nasdaq:LYFT), DoorDash Inc. Cl A (NYSE:DASH), or even someone like Papa John’s International Inc. (Nasdaq:PZZA).
That shines a light on an interesting start-up primarily operating the Toronto area and trading on the OTC: Two Hands Corp. (OTC US:TWOH).
Spotlight: Two Hands Corp. (OTC US:TWOH)
Through its Gocart.city division, TWOH is an up-and-coming player in the grocery delivery space, competing for market share with Instacart, which is now worth an estimated $39 billion. The company is seeing accelerating growth and plans to expand to new regions.
Gocart.city bills itself as an online grocery delivery market that services the Greater Toronto Area and beyond. It curates and delivers the freshest produce and specialty foods in Southern Ontario, with plans on expanding to other major markets.
Two Hands Corp. (OTC US:TWOH) has made a number of recent key announcements. In August, TWOH announced that it had reduced its current debt by 67.7%.
“The market has indicated that serious changes need to occur, management and our board have been working with our current debt holders to extend the maturity dates for debt valued at $1,190,320 to December 31, 2025.”, commented Nadav Elituv, Chief Executive Officer. “In order for the company to receive the financing needed and execute on our continued commercialization initiatives we have been moving forward with our CSE listing and expect to refile before the end of October 2021.”
That announcement was followed by news from the company that its Gocart.city orders in October exceeded all orders in the company’s prior quarter. In other words, its one-month October orders exceeded its total orders for the three months ended September 30.
“Our new sales programs are proving to be successful and contributing to the sales growth we’re seeing this quarter”, commented Elituv.
Between those updates, the company announced that it closed $1,000,000 in Series D funding. “Adding the $1,000,000 in cash to our balance sheet is a critical requirement to move forward with our CSE listing,” commented Elituv. “The CSE listing will allow the company to execute on our growth plans over the next year.”
Two Hands Corp. (OTC US:TWOH) shares have been showing some strong life in recent action, pushing as much as 50% higher in the past 10 days after checking key support at its summer lows. A push above its major moving averages, which lie just above its November highs, could inspire some momentum trader interest. Something similar happened in July and August, when TWOH shares broke above their major MAs and subsequently doubled in a matter of days.
Most importantly, TWOH, and its Gocart.city service, which appears to be rapidly growing in the food delivery space in a major metro area in North America, could make a perfect candidate for the acquisition spree that appears to be in place in this group.
