GrubHub Plans $100 Million IPO

GrubHub

As expected, GrubHub Inc filed for an initial public offering to sell up to $100 million in stock in order to finance its growth.

Strong recent growth

The recent growth at GrubHub has been strong.  According to GrubHub’s S-1 filing, the firm, formerly known as GrubHub Seemless, had a 67% increase in revenue from 2012, generating $137 million on over 135,000 orders, or approximately $1.3 billion in food sales.

A profitable tech startup

Perhaps more significant, the internet tech start up showed a profit, with net income of $6.7 million. The company connects diners to over 28,000 restaurants in 600 cities across the US primarily through the Internet, and 43% of customers use their mobile application to order food.  The service is free to consumers but it takes a small percentage surcharge from the restaurant.

Correct market environment?

With Facebook Inc (NASDAQ:FB) paying a record $16 billion to acquire WhatsApp, a deal announced last week, the market environment may be right for additional tech IPOs, or at least that’s what GrubHub Inc., may be hoping.

Chicago-based GrubHub has engaged in a flurry of pre-IPO activity lately.  Last year GrubHub and New York-based Seamless merged, which was followed by T. Rowe Price Group Inc (NASDAQ:TROW) taking a stake in the combined firm.  In late January GrubHub and Foresquare announced they were launching a joint project.  As reported in ValueWalk, under the agreement, users can search for a restaurant through the Foursquare application and the GPS application inside the mobile phone will serve up participating restaurants.

The early stage investors include Spectrum Equity, Aramark’s private-equity fund, Origin Ventures, Benchmark Capital and DAG Ventures. GrubHub expects to be listed on the New York Stock Exchange under the ticker GRUB.

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About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com

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