Food delivery company Grubhub is considering a few strategic options to continue to compete in an increasingly crowded market, including a potential sale or an acquisition by another company, according to a report by The Wall Street Journal.
The Chicago-based company has hired financial advisers to help guide it through this difficult time. They are also preparing for the possibility of an activist appearing in the shares.
Grubhub, which went public about six years ago, is worth around $4.5 billion. Since its valuation of around $13 billion just last year, increased competition – as rival companies offer deep discounts and promotions – has eaten away at its market share.
Many experts in the field say the market needs to consolidate, and that there isn’t much room for more than two companies in the delivery ecosphere.
At the end of October, the company slashed profit forecasts and revenue, blaming the issue on slow customer growth. That started a domino effect that saw shares dip 43 percent, leading to the review. In Q3, shares were down 40 percent from a year earlier, although they have recovered slightly in the past few months.
Grubhub could potentially merge with a few different companies, including Postmates, Uber Eats and DoorDash. Both Postmates and DoorDash have reportedly looked into merging options as an alternative to going public.
Grubhub Chief Executive Matt Maloney recently said the delivery industry is in a “weird bubble that is about to burst,” and that after the WeWork debacle that saw its own attempt at an IPO fall apart, investors are more cautious when it comes to companies going public.
Grubhub, which operates in London and America, was started in 2004 and went public a decade later, after a consolidation with New York-based Seamless. Recently, the company has been acquiring smaller outfits and growing its logistics capabilities.