Shares of GrubHub GRUB popped today, closing slightly above 8% on news that Amazon.com's AMZN food delivery competitor Amazon Restaurants was shutting down operations; shares of smaller rival Waitr WTRH closed up slightly above 2% on the day as well. Amazon stated on Tuesday that as of June 24th, the company would cease Amazon Restaurants business operations in the U.S.
Amazon Restaurants was founded in 2015 to give Amazon Prime members the opportunity to order meals separate from ordering products or groceries. Eventually, Amazon Restaurants services expanded to more than 20 U.S cities and even across the pond in London. The London outpost was eventually terminated this past November.
Jeremy Scott, a Mizuho Group analyst who focuses on the restaurant industry, sees Amazon Restaurants closure as expected. Scott also believes the food delivery industry can only support two or three companies at most, and went on to say that Amazon's departure from the food delivery industry is overall good news for GrubHub, as the threat that Amazon's presence posed is now eliminated.
GrubHub is currently a Zacks Rank #3 (Hold), with estimated long-term EPS growth rate of +23.16%. Additionally, sales have grown +12.53% compared to the previous quarter and +39.21% compared to the previous year. Shares have risen 4.51% in the last four weeks, and are up +1.80% relative to the S&P 500. The company has been seeing some upward momentum lately, and with Amazon shutting down its food delivery business, GrubHub has the chance to scoop up a larger market share, and must act accordingly to capitalize.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Grubhub Inc. (GRUB): Free Stock Analysis Report Waitr Holdings Inc. (WTRH): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research