Grubhub, the food delivery startup, saw shares tumble on Friday (April 12) due to competition from rival delivery service Uber Eats, according to reports.
The stock fell 5.3 percent in afternoon trading and volume reached 5.3 million shares, which is more than 50 percent of the day’s average of 2.3 million.
The stock was going in the direction of having its lowest close since the end of 2017. It has gone down 5.5 percent since its record close of $146.73 on September 11 of 2018. It has only has a 0.6 percent gain in the same time period.
Uber filed for an IPO on Thursday, and the company said “Uber Eats has grown to be the largest meal delivery platform in the world outside of China based on gross bookings.”
It also said in its S-1 filing that because the company is so large, it believes it can be faster than any other delivery platform. It also pointed to its relationship with McDonald’s as evidence of growth.
“What began as a small pilot program has expanded to more than 13,000 McDonald’s restaurants globally, which we were able to quickly scale up thanks to our global platform,” Uber said.
Grubhub Chief Executive Matt Maloney recently said he would continue to invest money in the company in an attempt to stand out from the many delivery options available to consumers.
In an interview with CNBC’s Jim Cramer on “Mad Money,” Maloney said the company will continue to be aggressive with its investments in the business, even if it pressures the stock. “I have always been willing to be extremely aggressive investing in the future,” the executive said on the show.
Regarding the stock’s decline as investors fret over increased spending, Maloney said it comes with being a publicly traded company. “The market now is 10 times what I thought it was five years ago” (when Grubhub went public), Maloney said. “And it’s because the American public has just adopted digital ordering as their preferred way to engage with their local restaurants.”