GrubHub Makes a Strong Debut - Analyst Blog

By
A A A

Initial Public Offerings (IPO) continues to enjoy the favors of the market. The latest one being GrubHub Inc. ( GRUB ) , whose shares surged 30.8% ($8.00) to close at $34.00 on Apr 4, 2014. The online food-delivery service raised $192.4 million on IPO, much higher than its initial expectations.

The sharp jump in GrubHub shares reflects growing appetite of investors for IPOs, particularly in technology and Internet-related sector. Except King Digital ( KING ) , the developer of Candy Crush Saga (dropped 16.0% in its first trading day) most of the IPOs from the sector were successful to date in 2014.

GrubHub initially offered 7.0 million shares with a price range of $20.00 to $22.00 per share. However, the strong IPO market pushed the company to raise the price range to $23.00 to $25.00. GrubHub finally sold 7.4 million shares for $26.00. Citigroup ( C ) and Morgan Stanley ( MS ) were the lead underwriters.

GrubHub has approximately 28,800 restaurant partners across 600 cities, which pay a fee when users place food orders. The company noted that approximately 43.0% of orders came through mobile devices in 2013. As of Dec 31, 2013, GrubHub had 3.4 million active diners.

Per S-1 filings, GrubHub processed 135K revenue generating orders per day, while gross food sales were approximately $1.3 billion in 2013. The company generated revenues of $137.1 million, up 67.0% from 2012. The Aug 2013 merger with New-York based Seamless was a significant revenue contributor.

GrubHub targets independent restaurants, which account for 61.0% of all U.S. restaurants. Per the company, Americans spent approximately $67.0 billion on takeout at these independent eateries, which is expected to jump rapidly. We believe that   improving mobile engagement will boost GrubHub's top-line growth in 2014.   

Moreover, GrubHub enjoys a first mover's advantage in the online and mobile delivery service market. The company's strong base of restaurant partners well positions it to face intensifying competition from the likes of OpenTable, going forward.



CITIGROUP INC (C): Free Stock Analysis Report

KING DIGITL ENT (KING): Free Stock Analysis Report

MORGAN STANLEY (MS): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: GRUB , IPO , C , KING , MS

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Russell’s One Good Reason
Russell’s One Good Reason           
Tammy’s One Good Reason
Tammy’s One Good Reason             
Lisa’s One Good Reason
Lisa’s One Good Reason              

Stocks

Referenced

Most Active by Volume

87,324,760
  • $7.31 ▲ 22.04%
79,329,227
  • $17.16 ▲ 0.76%
74,153,988
  • $8.87 ▼ 5.84%
49,177,672
  • $34.01 ▲ 4.39%
44,197,901
  • $101.40 ▲ 1.38%
43,197,735
  • $11.70 ▲ 3.36%
42,712,021
  • $74.99 ▲ 1.19%
42,423,171
  • $108 ▲ 0.95%
As of 10/31/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com