Grubhub in Freefall – In a Free For All market
Facing its sharpest one day decline in its five-year history as a public company, and ranking as one of the steepest falling stocks of the week, shares of Grubhub (NYSE: GRUB), the once-dominant food delivery operator, tanked more than 40% after a disappointing earnings announcement. Back in 2014, Grubhub's IPO saw their shares trading at $40 on opening day. The company has seen its market value tumble by more than 60% over the last year, recently hitting a 52 week low near $32 a share.
For the third quarter 2019, while revenues were $322.1 million, a 30% year-over-year increase from $247.2 million, Grubhub net income plummeted from $22.7 million down to $1.0 million. If a company grows its top-line revenue, it should also increase profits, at least that is what we learned in Economics 101. Grubhub grew the top line, but fell far short of its sales target and barely made any income at all.
This type of surprise negative earnings announcement often marks the beginning of a protracted bear run for a company. The high flying Wall Street darlings from last year can soon become the dog stocks for next year.
Source Fool.com
