Grubhub Stock Is Still Too Risky
Late in October, Grubhub (NYSE: GRUB) stock plunged more than 40% in one day after the online food-delivery marketplace missed its third-quarter revenue estimates and slashed its guidance.
That Q3 report made clear that Grubhub would not be able to maintain its pattern of posting strong top-line growth and profits in the face of competition from Uber (NYSE: UBER) Eats and DoorDash, which have been successfully attracting both customers' orders and restaurant partnerships. At the time, CEO Matt Maloney even called consumers "promiscuous," noting that Grubhub users were no longer showing loyalty to the service, but instead ordering from multiple providers.
In the months leading up to the arrival of its Q4 report last week, Grubhub's share price fully recovered from that sharp tumble. No specific news propelled the price rebound, though there was a rumor about the company selling itself, which management dismissed. Instead, investors appeared to be gradually buying into the company's new strategy as well as its upside potential, and they were willing to take a chance on a stock that is still down nearly two-thirds from its all-time high.
Source Fool.com
