Grubhub share price soars as it beats off the big boys
Select language to see a machine translation of this article. The original language of the Article is English and the translation is provided for your convenience.

Grubhub share price soars as it beats off the big boys

Food order and delivery platform saw its share price jump last week, as a potential threat exited the market. Last Monday, ecommerce giant Amazon announced that it was shuttering Amazon Restaurants on June 24. This takeaway-facing arm of Amazon’s business was operational in 20 US cities, and launched in the UK late last year. Amazon hasn’t necessarily gone for good – it is interested in acquisitions in the space, and has a few investments already – but the fact that one of the biggest boys in the business world has pulled out sent Grubhub’s share price up last week.

Grubhub’s share price has risen by 10% over the last month

grubhub g 170619

Source: Yahoo Finance

According to a statement from Amazon: “a small fraction of Amazon employees are affected by this decision, and many of those affected have already found new roles at Amazon. Employees will be offered personalized support to find a new role within, or outside of, the company.” Amazon remains active in the industry with a stake in UK-based food delivery service Deliveroo.

This is a positive for Grubhub, which Jeremy Scott, a Mizuho Group analyst who focuses on the restaurant industry, sees as a “comparatively cheaper” acquisition target than some of its peers. According to Scott, Amazon “remains some commitment to the space” and Amazon Restaurant was “not a reflection of what they’re aiming to do.” This news both eliminates the “existential threat of Amazon” in the here and now, while potentially setting up a lucrative acquisition “down the road, should they want to take a leap step into the market.”

Speaking about Grubhub’s soon-to-be defunct competitor, he added: “The move is not terribly surprising given Restaurants never appeared to be a major priority for [Amazon]. In several years of operation, Restaurants had mixed traction, capturing single-digit market share in most markets.”

Disclosure
Dominion holds Grubhub in its Global Trends Ecommerce Fund.


If you would you like to receive the Newsfeeds daily, please click here to sign up now!

Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
0.0/5 rating (0 votes)

Disclaimer
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.