Reportedly, GrubHub Seamless Inc. has made a confidential filing with the Securities and Exchange Commission for an initial public offering (IPO).
GrubHub Seamless is a mobile and online food-ordering company with a catalogue of more than 26,500 take-out restaurants in roughly 600 U.S. cities and London. It was formed when Chicago-based Grubhub and New York-based Seamless — two of the leading U.S. online food ordering services — merged in May 2013.
The combined entity processes about 150,000 customer orders on a daily basis. In 2012, the company generated sales of more than $100 million. GrubHub Seamless’ filing can be kept confidential as that the law allows any company with less than $1 billion in revenues in the past fiscal year can initially file an IPO secretly with regulators.
The company is expected to launch the IPO in the first half of the year. No details were made available beyond the confidential announcement. Given the lack of details, it is reasonable to assume that a GrubHub Seamless IPO still might be some way off, but it is worth speculating whether the company will be a good investment.
GrubHub Seamless is making great progress to improve revenues, thanks mostly to a surge in mobile users and increasing demand for online food ordering services. The frequent use of tablets and smartphones has fueled the growth in the online food ordering market. According to a new study by the Interactive Advertising Bureau (IAB) and Viggle, approximately 69% of consumers order food online using a mobile device. They use their mobile devices to find out restaurant locations, check out menus and read reviews.
Most recently, GrubHub Seamless announced a partnership with Foursquare that will allow Foursquare users to order takeout directly through the app available on all iOS and Android devices. Considering Foursquare's user base of over 45 million, we believe that this significantly expands GrubHub’s reach.
The 2013 IPO market delivered its best performance in more than a decade. As per IPO research intelligence Renaissance Capital, 2013 was the banner year for the IPO market, as 222 companies completed their IPOs, raising nearly $55 billion. Most of the companies that went public last year have outperformed the broad markets and many generated triple-digit returns. These include Facebook (FB - Analyst Report), up 82.0% since its IPO, Twitter (TWTR - Analyst Report), up 26.1%, and LinkedIn (LNKD - Analyst Report), up triple-digits.
This trend will likely continue this year given a surging stock market, improving economic fundamentals and increasing consumer confidence. Other companies which are expected to go public this year include Coupons.com Inc. and GoPro Inc., which have also filed confidentially for their IPOs. Online storage company Box Inc. and web home-goods retailer Wayfair LLC have also hired banks to ready potential IPOs.
This is clearly a great environment to bring a fresh consumer technology stock to market, but pricing is hard to predict given the lack of available details.