Please ensure Javascript is enabled for purposes of website accessibility

Why Grubhub's Stock Was Down 12.5% Today

By Rich Duprey – May 7, 2020 at 4:17PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The food delivery specialist saw business in key markets take a hard hit because of the pandemic.

What happened

Grubhub (GRUB) stock fell sharply on Thursday after a first-quarter earnings report that failed to produce the expected gains from the coronavirus pandemic.

So what

Although food delivery turned out to be a lifeline that has kept many restaurants afloat, New York is Grubhub's biggest market for both consumers and corporate orders, and is also the epicenter of the pandemic. Its business there suffered greatly, with restaurant partner business plunging 50% from pre-crisis levels, while other Tier 1 cities saw a 10% to 25% decline. Tier 2 and Tier 3 cities fared better, only losing 10% of their business.

Woman with Grubhub delivery bag.

Image source: Grubhub.

While Grubhub had been growing prior to the outbreak, it noted the last two weeks of March resulted in orders tumbling by double-digit rates.

Now what

Grubhub said "active diners" jumped 24% to 23.9 million while "daily active grubs," a metric it uses to identify its daily users, declined 1% to 516,000. Gross food sales rose 8% to $1.6 billion.

However, according to a statement by founder and CEO Matt Maloney, the food delivery company will be using all of its profits in the second quarter to support its restaurant partners "to generate as many additional orders for our restaurant partners as possible. We hope that the darkest days are behind our restaurant partners and they can start focusing on the recovery."

Grubhub's stock was tumbling 12.5% heading into the market's close.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GrubHub Inc. Stock Quote
GrubHub Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.