INSUBCONTINENT EXCLUSIVE:
Shares of Chicago-based food delivery service Grubhub are sharply higher in regular trading today after The Wall Street Journal reported
that the company has hired external advisers to explore its “strategic” options, inclusive of a possible sale.Investors, heartened by
the news, bid its equity up 17% as of the time of writing, valuing the firm at around $57 per share, or $5.2 billion.The news comes during a
difficult time for the company
Grubhub’s value fell sharply last October after it reported its third-quarter earnings
At the time, the company cited new and rising competition as growth-related difficulties, as well as noting that, in its view, “the supply
innovations in online takeout have been played out and annual growth is slowing and returning to a more normal longer-term state.” It
expected “low double digit” growth in the future.Investors dumped its shares after reading the growth warnings, sending Grubhub equity
from the high $50s per share to the mid-$30s
Since then, the company’s share price has recovered; with today’s news, Grubhub is effectively back to where it was before the Earnings
Report from Hell.All this may sound a bit boring, frankly, to regular TechCrunch readers
What do Grubhub’s troubles have to do with startups, private capital and high-growth companies? A lot, as it turns out.Grubhub competes
with a number of startup darlings, including Postmates (trapped in Schrodinger’s Exit at the moment), DoorDash (aggressively valued, under
fire for payment practices and theoretically considering a direct listing despite unprofitability) and Uber Eats (a deeply unprofitable
portion of Uber’s larger Red Ink empire).So what happens to Grubhub could impact two unicorns looking to go public, and another post-IPO
unicorn looking to shore up its income statement
As CNBC noted following the Grubhub report, “Uber shares also spiked on the news, as investors bet consolidation in the crowded
food-delivery industry would help the company.”Consolidation could assist remaining players squeeze out more margin from their market
More margin means smaller losses
And as smaller losses are hot now in the IPO world, the move could help some yet-private companies get public.After years of beating each
other up, one key player in the on-demand food delivery space is willing to sell, or join up with someone else
That’s big news, given the sheer scale of the venture bet on companies that compete with Grubhub.
