I first talked about Grubhub three months ago,
GrubHub (NYSE:GRUB) is the world's leading online and mobile food ordering company, currently partnering with over 80,000 restaurants in 1,600 U.S. cities. Despite competition from the likes of Uber, DoorDash, Postmates, Square and Amazon, GrubHub still controls 34%% of the U.S. food delivery market.
Grubhub, no longer has its first to mover competitive edge. In order to stay ahead of the competition, Grubhub will have to continue to grow in other cities and their marketing expense are going to have to grow as well, which will increase their customer acquisition costs.
DoorDash has come up the rear and doubled its market share over last year to 28% through February, while Grubhub suffered an 11% loss in market share and in the process gave up its #1 market share spot to DoorDash.
Many of Grubhub’s critical metrics like initial diner spend and peak diner spend are all decrease because customers are warming up to food ordering delivery and are using multiple companies now. As a result, GrubHub is one of the most heavily shorted stocks on Wall Street and started smelling blood back in September.
The Smart Money wants a piece of the action as well. With the stock price already down 10% in 2019, yesterday, I noticed bearish unusual options activity in GrubHub. The Smart Money bought over 7,000 put options with a strike $60 strike price that expire in four weeks.
The chart suggests the monthly demand at $68 is used up and suggests there is more downside risks.
The next major level is the monthly demand at $41, so price should have not problems getting to $60 within the coming weeks.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.