GrubHub (GRUB): Competition Concerns Alleviate After 1Q Results

One of the concerns around GrubHub centers around the competitive landscape within the online food ordering space. With the industry still in its nascent stages, competitors such as Ubereats, Amazon, Postmates, Doordash, and a bevy of other smaller startups are all aggressively vying for market share. Prior to the company’s 1Q results, investors debated how this might negatively impact GrubHub’s growth trajectory in the long run.

The company reported 1Q results in late April that suggested that concerns were overblown. Particularly, active diner growth and take rate were higher than investor expectations and suggested competition was not impacting their pricing or their ability to attract customers.

Going forward, these two metrics are key to how the company is faring against competition. For active diner growth, the company is increasing its marketing spend and shifting its customer acquisition strategy towards a more targeted approach. Analysts have revised their estimates upwards as a result and now expect just a slight moderation throughout the year.

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For take rate, analysts are now modeling a sequential improvement throughout the remainder of 2017, and have also revised estimates upwards by roughly 50-60 basis points.