Citi analyst Mark Mahaney just downgraded OpenTable, the restaurant reservation service and software provider, from a “buy” to a “hold.”Why?
Mostly because the stock has been on a ridiculous tear since last fall, and at $107 per share, the company is now trading at 51X what Mahaney expect’s OpenTable’s EBIDTA earnings will be in 2011.
Beyond that, Mahaney says downside risks for OpenTable include:
- The possibility that Toptable integration takes longer than expected and provides less synergies
- Increased competition both in U.S. and Europe (Google/Micros, UrbanSpoon, NRA, LiveBookings, etc.)
- Risk associated with exposure to highly discretionary consumer spend and uncertainty
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