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GrubHub Inc GRUB

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Amid the Pandemic, Grubhub Sees Operating Costs Outpace Sales Growth

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

Grubhub reported strong third-quarter results as it continued to benefit from increased demand for online food delivery during the pandemic. However, Grubhub must continue to spend heavily on marketing to compete with DoorDash, Postmates, and Uber Eats, with the last two planning to merge by the first quarter of 2021. The firm is being acquired by Just Eat in an all-stock deal likely to close by the second half of 2021. However, we do not believe that this deal will improve no-moat Grubhub’s competitive positioning in the United States. While we project continued strong demand for online food delivery with the ongoing spread of COVID-19, we are uncertain that the current levels will be sustainable when the economy eventually reopens. We value Grubhub at $77 per share based on the current market price of Just Eat

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Company Profile

Business Description

Founded in 2004, Grubhub provides an online takeout food platform for diners and restaurants. The firm generates revenue by charging restaurants a commission based on each order amount. It also charges consumers a delivery fee for orders where the firm handles the delivery. Grubhub has over 50,000 restaurant partners.

111 W. Washington Street, Suite 2100
Chicago, IL, 60602
T +1 877 585-7878
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 2,714