In the latest GrubHub (NYSE:GRUB) news, the company’s stock is taking a hit Friday afternoon due to mounting competition from other food delivery services such as Uber Eats.
Encouraging forecasts from Uber Eats are threatening to reduce GrubHub’s market position, with Jefferies analyst Brent Thill said in a note that the brand “creates a challenging competitive environment” for GrubHub. He wrote this note to clients after a Thursday filing that revealed what Uber’s upcoming IPO has in store.
The Uber Eats take rates — which is the fee that it charges to restaurants — went down last year, with the company adding that rates may continue to be pressured. On the other hand, GrubHub’s rates have been going up every year since the company decided to go public–their rates may be pressured as well moving forward.
Nevertheless, Thill added that it is a huge industry with a possible market size of $200 billion in the U.S., which means food delivery won’t have to be a “winner-take-all industry.”
GRUB stock is down about 5.7% on Friday following the news. The stock has fallen from $75.46 a share to $69.40 a share in 2019 alone, a decline of more than $6 a share, or 8%. Thill said that investors should be patient if they plan on investing in GrubHub, which is currently listed as having a “hold” rating with the firm.