Shares of GrubHub (GRUB) are slipping after Wedbush cut their price target on the stock following Uber's (UBER) S-1 filing. In the filing, Uber provided data on its Uber Eats division, which competes with GrubHub.
WHAT'S NEW: Last night, Uber disclosed in an S-1 filing that it has filed for its initial public offering on the New York Stock Exchange under symbol "UBER." The company also provided comments and financial information about its different modes of operation, saying that its food delivery service Uber Eats has grown to be "the largest meal delivery platform in the world outside of China based on Gross Bookings." Uber said that its scale enables average delivery time to be faster than the average delivery time for its rivals, and that of the 91M Monthly Active Platform Consumers, or MAPCs, on its platform, over 15M received a meal using Uber Eats iin the quarter ended December 31, 2018. Other notable data from the S-1 include roughly $7.9B in Eats gross bookings for 2018, marking year-over-year growth of 168%, and about $1.5B in Eats revenue, up 149% from last year.
WEDBUSH CUTS GRUB PT: Following Uber's S-1, Wedbush analyst Ygal Arounian cut his price target for GrubHub to $100 from $130 but kept an Outperform rating to better reflect the continued changes in competitive dynamics. The analyst noted that GrubHub investors were likely hoping for more information on Uber Eats' U.S. diners, gross food sales, and profitability, but added that Uber Eats' take rate was 18% in 2018, which is comparable to GrubHub's take rate of roughly 20% last year. While Arounian highlighted that GrubHub's take rate has been on the rise while Uber Eats' take rate has been declining, he said that Uber Eats' global scale and growth is "impressive," pointing out that the service currently operates in 500 cities globally and plans to expand to 700 where it already offers ridesharing services. Uber Eats currently delivers from 220,000 restaurants worldwide versus GrubHub's 105,000 U.S. restaurant partners. The analyst estimates Uber Eats' U.S. scale is where he previously expected and trails GrubHub, however.
JEFFERIES KEEPS PT: Meanwhile, Jefferies analyst Brent Thill maintained a Hold rating and $80 price target on GrubHub, saying that while there was no disclosure on Uber Eats' profitability, the firm believes the business is losing money given Uber's total loss levels. The analyst said that while the rapid growth of Eats creates a "challenging competitive environment," he does not think third party food delivery is a winner-take-all industry. Thill added that he believes much of the information disclosed by Uber last night was already well understood by investors, and that while GrubHub is down roughly 54% from its highs, he believes much of that performance has been a direct cause of increased competition and disclosures from Uber and other bigger players. The analyst also said he continues to like Waitr Holdings (WTRH) and would be a buyer of the shares on the recent pullback.
PRICE ACTION: In late morning trading, shares of GrubHub are down 6.6% to $64.85.
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