Why GrubHub, Inc. Shares Are Gorging on Gains Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of GrubHub, Inc. (NYSE: GRUB  ) are trading roughly 8% higher this afternoon after peaking at a gain of over 11% near lunchtime. GrubHub seems to be part of a rising tide of mobile-centric dining apps following in the wake of's $2.6 billion acquisition  of OpenTable (UNKNOWN: OPEN.DL  ) , which was announced this morning.

So what: OpenTable was bought at a near-50% premium its Thursday closing price, and GrubHub is currently valued quite similarly to the OpenTable buyout price -- its $2.8 billion market cap is within spitting distance of Priceline's $2.6 billion bid. Since both OpenTable and GrubHub help smartphone users get the food they want when they want it, investors who missed out on the OpenTable acquisition seem to be flocking to the similarly positioned GrubHub.

Now what: While OpenTable and GrubHub both serve hungry smartphone users and have similar valuations and their business models are somewhat at odds with each other -- OpenTable is targeted at users who want to sit down at a restaurant at a certain time, while GrubHub helps its users get restaurant deliveries from establishments that don't typically deliver their meals. GrubHub is also so new to the public markets (its IPO took place just two months ago) that it's somewhat less likely to be bought out in the near future. GrubHub's forward P/E of 200 is also nearly three times OpenTable's forward P/E of 75 following the acquisition, which may be too rich a price for potential acquirers to swallow. I'd stay on the sidelines for now.

Are you ready for this $14.4 trillion revolution?
Have you ever dreamed of traveling back in time and telling your younger self to invest in Apple? Or to load up on at its IPO and just keep holding? We haven't mastered time travel, but there is a way to get out ahead of the next big thing. The secret is to find a small-cap "pure play" and then watch as the industry -- and your company -- enjoys those same explosive returns. Our team of equity analysts has identified one stock that's ready for stunning profits with the growth of a $14.4 TRILLION industry. You can't travel back in time, but you can set up your future. Click here for the whole story in our eye-opening report.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2993943, ~/Articles/ArticleHandler.aspx, 8/28/2015 8:26:21 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Alex Planes

Alex Planes specializes in the deep analysis of tech, energy, and retail companies, with a particular focus on the ways new or proposed technologies can (and will) shape the future. He is also a dedicated student of financial and business history, often drawing on major events from the past to help readers better understand what's happening today and what might happen tomorrow.

Connect with Alex on LinkedIn or Twitter for more news and insight:

View Alex Planes's profile on LinkedIn

Today's Market

updated Moments ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:06 PM
GRUB $26.91 Up +0.81 +3.10%
Grubhub CAPS Rating: **
OPEN.DL $0.00 Down +0.00 +0.00%
OpenTable CAPS Rating: *