Grubhub 1Q Results Beat Expectations; Shares Remain Overvalued
Grubhub reported better-than-expected top- and bottom-line results in the first quarter, driven by growth in the number of diners and the daily average number of orders, helped by the Eat24 acquisition and partnership with Yelp. However, organic growth in active diners and gross food sales were not very impressive, supporting our view that no-moat Grubhub shares are significantly overvalued. While the firm’s continuing diner and revenue growth may point to a first-mover network effect moat sourc...Grubhub and its wholly-owned subsidiaries provide an online and mobile platform for restaurant pick-up and delivery orders. The company connects diners and restaurants through restaurant technology and platforms. Diners enter their delivery address or use geo-location within the mobile applications and the company displays the menus and other relevant information for restaurants in its network. Orders may be placed directly online, via mobile applications or over the phone. The company primarily charges the restaurant a per order commission that is fee based. In several markets, the company also provides delivery services to restaurants on its platform that do not have their own delivery operations.
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