Grubhub stock soared Wednesday following a report the food delivery company hired financial advisors to explore a possible sale and other strategic options.
XThe review of a Grubhub (GRUB) sale is at an early stage and it is possible nothing will come of it, the Wall Street Journal reported.
Grubhub stock surged 12.6%, closing at 54.75 on the stock market today.
The company held its initial public offering in 2014, pricing shares at 26. Grubhub stock hit a record high of 149.35 in September, 2018. It's down 64% since then.
Competition in the food-delivery market is intense. They include the Uber Eats division of Uber (UBER), as well as Postmates and DoorDash.
Grubhub Stock Crashes On Quarterly Results
Grubhub reported third-quarter results on Oct. 28 that missed Wall Street expectations — and offered a dismal fourth-quarter outlook — in the face of slowing industry growth and heated competition. The trouble for Grubhub was compounded by analysts who slashed their price targets in the face of a drastically downsized profit picture. Grubhub stock crashed 43% in reaction.
Grubhub, Uber Eats, Postmates and DoorDash combined control roughly 80% of the food delivery service business. But the food fight is far from over. Dozens of smaller companies hope to stake their claim and capture some of the billions of dollars in venture capital now there for the taking. Analysts have said the industry needs consolidation.
Revenue growth at Grubhub has decelerated for the past four quarters. Revenue in the third quarter reached $322 million, up 30% from the year-ago period. Adjusted earnings dropped 40% to 27 cents per share. The company operates in the U.S. and London.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
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