The Top 3 Sources of Value for OpenTable

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OpenTable ( OPEN ) is the leading provider of free, real-time online restaurant reservations for diners and reservation and guest management solutions for restaurants. It has more than 20,000 restaurants across the globe as its customers, and has seated more than 200 million diners since its inception in 1998. The company is comfortably ahead of its competitors like Urbanspoon, owned by IAC/InterActiveCorp ( IACI ) and UK-based companies liveRES Ltd and Livebookings Ltd.

Since late 2010, the company has also added Groupon to its list of competitors by selling third-party restaurants coupons through its website. Below we look at what makes up our $94.64 price estimate for OpenTable , which is at a premium of 8% to the stock's market price.


3 Key Drivers for OpenTable Stock

1) Reservations - represents 59% of the company's stock value

The OpenTable online reservation service is free for diners, but the company charges its restaurant customers a reservation fee for each diner that reserves a table at the restaurant using the OpenTable system. OpenTable currently charges restaurants $1 for each diner seated through the opentable.com website, and $0.25 for each diner seated through the restaurant's own website.

See the top forecasts reservation revenues

2) Subscriptions - 21%

OpenTable charges all its restaurant customers a monthly subscription fee for the use of its proprietary software and hardware. The subscription fee also includes the services of OpenTable's support help desk which addresses issues related to software.

See the top forecasts for subscription revenues

3) Spotlight, Advertising and Others  - 16%

OpenTable's restaurant customers sell half-price coupons through Spotlight and advertise on the opentable.com website. Other services include OpenTable Connect, targeted towards mid-sized restaurants and restaurants which primarily take walk-ins, and Private Dining, which allows restaurants with private rooms to list them on OpenTable.

See the top forecasts for spotlight, advertising revenues and others

See our full analysis for OpenTable here



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 , Investing Ideas , Stocks , US Markets

Referenced Stocks: IACI , OPEN

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