The Covid-19 pandemic may be subsiding but some of the habits that spawned from it remain intact, one of which is the reliance of consumers on food delivery services. One company operating in this space was a favorite among investors in the early stages of the pandemic but has seen shares decline gradually over the course of 2021. Things may be shifting for food order and delivery platform Waitr Holdings (NASDAQ:WTRH), though. Today brought some news that has WTRH stock spiking and investors watching closely.
What’s Happening With WTRH Stock
This morning it was announced that Morgan Stanley (NYSE:MS) had taken a 10.3% stake in Waitr. According to the company’s 13G filing, the investment bank’s stake consists of 12.13 million shares of WTRH stock.
As of this morning, those shares are worth quite a bit more than they had previously been. WTRH stock rose by more than 48% in pre-market trading and it only kept climbing after markets opened. As of this writing, shares are up more than 54% on the day and despite some slight downticks, today’s growth has been quite consistent.
This development is welcome news for shareholders, who saw the stock spend most of last week flatlining at less than $1. Prior to this morning’s gains, the stock was down more than 19% for the month.
What It Means
This hasn’t been a great year for Waitr. While the company was able to ride the first wave of food delivery needs brought on by the pandemic, its growth did not prove sustainable. InvestorPlace analyst Luke Lango predicted this type of trend in March 2020, noting that while WTRH stock was red hot, its growth wasn’t likely to last. As he stated:
“The thesis is simple. Consumers can’t go to restaurants anymore. And not all consumers can or want to cook, so there should be a surge in demand for food delivery services like Waitr, Uber Eats, Postmates, Doordash, etc during the coronavirus outbreak. The problem with this thesis, though, is equally simple. Most of those consumers aren’t going to turn to Waitr.”
As it stands, he was right. Waitr saw shares gradually decline as restaurants began to reopen. This hasn’t been the case for the entire food delivery sector, though. While the past year to date has seen WTRH stock fall by more than 50%, it has also seen larger competitor DoorDash (NYSE:DASH) rise by 40%. InvestorPlace’s Chris MacDonald recently noted that DoorDash held up well amid the recent “market bloodbath.”
More recently, data from market analysis platform Fintel has indicated that short interest in Waitr is fairly high, with short interest as a percentage of the float being close to 16%.
Why It Matters
There’s no denying that much of what Waitr has experienced this year hasn’t been encouraging to investors. This recent news from Morgan Stanley may be exactly what the company needs to finally shake these negative trends and start growing again, though.
If you’re watching the food delivery sector, Waitr should be on your list. DoorDash has the market share, but that doesn’t mean there’s not room for a competitor to make a name for itself.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
