On Thursday, shares of online and mobile food ordering company Grubhub Inc GRUB dropped over 5% in afternoon trading, and over 8% this morning, on news that popular ride-hailing company Uber is launching its own food delivery company called UberEats.
And on Wednesday, analysts at Cowen & Co lowered their price target for Grubhub from $22 to $20 because of Uber's omnipresence, high value, abundance of resources, and probable domination of the food delivery space.
"We see Uber's existing install base of both users and drivers as providing potentially important advantages vs. many existing competitors in food delivery," Cowen analyst Kevin Kopelman said in a research note.
Uber will launch its standalone food delivery app in 10 U.S. cities including New York, Los Angeles, Chicago, and Austin, Texas, among others. The app will be the companies first app outside its main ride-hailing app, and will go live in Apple's AAPL App Store and Alphabet's GOOGL Google Play Store by the end of March.
Uber has been testing the food-delivery service inside of its main app over the past 18 months, but it recently was launched as a standalone app available only in Toronto.
Shares of the company have been struggling beyond just today, and they are already down over 20% since 2016 began.
Currently, GRUB holds a #3 (Hold) on the Zacks Rank.
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 >>
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