GrubHub sees 40% of market value wiped out on dismal earnings report

  • GrubHub, the online food-delivery service, reported disappointing earnings Monday that showed slower-than-expected growth.
  • Shares fell as much as 40% in regular trading on Tuesday.
  • The company attributed its performance to diner “promiscuity” and increased competition.
  • Watch GrubHub trade live on Markets Insider.

GrubHub lost more than one-third of its market value after the company’s third-quarter earnings report Monday disappointed investors and sent shares falling.

Shares of the food delivery service plummeted as much as 40% in regular trading on Tuesday.

Here’s what GrubHub reported versus what analysts surveyed by Bloomberg expected:

  • Earnings per share: 27 cents reported versus 27 cents (expected)
  • Revenue: $US322 million reported versus $US330 million (expected)

The company – which also owns Seamless, LevelUp, and AllMenus – lowered its expectations for fourth-quarter revenue, which includes the holiday season, and now expects a range of $US315 million to $US335 million, below analyst expectations of $US388 million.

GrubHub attributed its lacklustre earnings and slowing growth to increased competition in the industry. “The easy wins in the market are disappearing a little more quickly than we thought,” the company wrote in a long letter to shareholders.

The company said that “online diners are becoming more promiscuous,” referring to what they see as eroded platform loyalty that previously drove growth. Now, with competition from Uber Eats, DoorDash, and Postmates, GrubHub is struggling to keep up.

In the third quarter, GrubHub reported that the number of active diners grew 29% to 21.2 million, up from 16.4 million a year ago. But, at the same time, daily average grubs, or DAGs, grew only 10% from a year prior, the company said.

Long term, the company said it believes that DAGs will settle in the “low double digits.”

GrubHub was down 24% for the year through Monday’s close.

Read more: An investor who turned $US15 million of firmwide assets into $US200 million explains his 3-part process for picking stocks – and breaks down a ‘once in a lifetime’ opportunity he sees in uranium

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