Shares of GrubHub (GRUB - Free Report) popped today, closing slightly above 8% on news that Amazon.com’s (AMZN - Free Report) food delivery competitor Amazon Restaurants was shutting down operations; shares of smaller rival Waitr (WTRH - Free Report) closed up slightly above 2% on the day as well. Amazon stated on Tuesday that as of June 24th, the company would cease Amazon Restaurants business operations in the U.S.
Amazon Restaurants was founded in 2015 to give Amazon Prime members the opportunity to order meals separate from ordering products or groceries. Eventually, Amazon Restaurants services expanded to more than 20 U.S cities and even across the pond in London. The London outpost was eventually terminated this past November.
Jeremy Scott, a Mizuho Group analyst who focuses on the restaurant industry, sees Amazon Restaurants closure as expected. Scott also believes the food delivery industry can only support two or three companies at most, and went on to say that Amazon’s departure from the food delivery industry is overall good news for GrubHub, as the threat that Amazon’s presence posed is now eliminated.
GrubHub is currently a Zacks Rank #3 (Hold), with estimated long-term EPS growth rate of +23.16%. Additionally, sales have grown +12.53% compared to the previous quarter and +39.21% compared to the previous year. Shares have risen 4.51% in the last four weeks, and are up +1.80% relative to the S&P 500. The company has been seeing some upward momentum lately, and with Amazon shutting down its food delivery business, GrubHub has the chance to scoop up a larger market share, and must act accordingly to capitalize.
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