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GrubHub Inc GRUB

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Morningstar’s Analysis

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Economic Moat




Grubhub Delivers Strong Diner and Revenue Growth but No Profit in Second Quarter

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

Grubhub reported strong second-quarter results as it benefited from increased demand for online food delivery, continuing the positive trend seen at the end of the first quarter. The second quarter reflected the full impact of COVID-19, and the firm experienced a surge in consumer demand as well as an increase in partnered restaurants. 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. Grubhub is being acquired by Just Eat in an all-stock deal also likely to close early next year. However, we do not believe that this deal will improve no-moat Grubhub’s competitive positioning in the United States. While we project strong demand for online food delivery with the ongoing presence of COVID-19, there is uncertainty that it will be sustainable at current levels when the economy eventually recovers and restaurants reopen. We now value Grubhub at $61 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 Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 2,714