GrubHub Stock Is Spiking Because Everyone Is Ordering Delivery

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By Gillie Houston Posted July 29, 2016

After reporting a $120.2 million revenue in its second quarter, the delivery site's shares experienced a 20 percent surge.

While restaurant dining spending has been on the decline—causing some to speculate of a coming restaurant recession—delivery services have continued to flourish, and the latest earnings release from top delivery dog GrubHub has Wall Street paying attention.

After reporting a $120.2 million revenue in their second quarter, a 37 percent boost from the same period just one year ago—the delivery site's shares experienced a 20 percent surge on Thursday, according to Forbes. This overall growth in revenue produced a jump in individual share earnings from 11 cents per share last year to 15 cents per share, beating analyst's expectations of the company's performance.

Of the brand's escalating success, CEO Matt Maloney said in a statement that "Product improvements, our delivery initiative and an updated brand drove better diner growth and significantly higher engagement." Between March and June of this year, 7.35 million people placed orders on Grubhub, 24 percent higher than the same period last year. While competitors like Postmates, Maple, and UberEATS have also taken a slice of the delivery pie, analysts say there is still plenty of room for profits to grow in the space—particularly in non-coastal areas that still have limited delivery options.

According to Morgan Stanley analyst John Glass, "Only about one-third of the population orders delivery food that is not pizza... but consumers like takeout food... and demand for takeout is consistent across urban, suburban, and rural markets." Glass says nationwide delivery is a $210 billion industry up for grabs, and it's only a matter of time before someone cashes in.

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