- GrubHub recorded its worst trading day on Tuesday as it nosedived by 45%.
- The company is losing ground to competitors like DoorDash and Uber Eats.
- Company executives appears to have no solution to stop the bleeding.
To say that GrubHub has failed to deliver would be an understatement. The company’s stock plummeted 45% on Tuesday as the food delivery company missed revenue estimates and lowered its guidance for the rest of the year. The drop marks GrubHub’s worst trading day in history and it’s likely to happen again.
According to CNBC, GrubHub posted third-quarter revenue of $322 million, which is significantly lower than consensus estimates of $330.5 million. In addition, the company told investors that it expects to print revenue between $313 million and $335 million in the fourth quarter – at least 15% lower than the forecast.
To investors, the third-quarter earnings report offers signs of a company slowly bleeding to death. This is supported by the fact that competitors such as DoorDash and Uber Eats are eating up GrubHub’s market share. In addition, company executives are clueless on how to reclaim their dominance in the food delivery space. Those are the ingredients for a broken stock.
DoorDash and Uber Eats Are Taking Over Food Deliveries
Although the meal delivery industry is a crowded space, it’s growing as more Americans prefer to eat restaurant food at home. According to Second Measure, sales for the food delivery industry grew by 40% year-over-year. Unfortunately for GrubHub, they are not maturing fast enough to capture a significant part of the industry’s growth.
The Second Measure report revealed that the company’s monthly share of U.S. food delivery sales has been in a strong downtrend since December 2018.