GrubHub Pops 50% As Wall Street Gobbles Up IPO

Apr 4 2014, 10:47am CDT | by

GrubHub Pops 50% As Wall Street Gobbles Up IPO
Photo Credit: Forbes Business

Investors got hungry when $GRUB debuted on the New York Stock Exchange on Friday morning.

Shares of online food ordering service GrubHub, which also operates Seamless, soared 50% in early trading after its initial public offering. The company priced shares above the expected range at $26, but they reached $39 a share at 10:42am ET — pushing the market capitalization over $3 billion.

GrubHub raised just over $192 million in the offering, selling 7.4 million shares. The company takes a cut, often over 15%, of every takeout or delivery order placed through its service. GrubHub says it generated $1.3 billion in gross food sales in 2013, serving approximately 3.4 million unique diners.

The IPO climate, especially for tech stocks, appears to be fantastic right now. According to a report by Renaissance Capital, the US IPO market showed more activity in the first quarter of 2014 than it had since 2000, as 64 companies raised a total of $10.6 billion. That’s more than double the total number of IPOs in the first quarter of 2013, and the average first day return was over 20%.

Once GrubHub Seamless, the combined company is the result of a 2013 merger last year. While it fiddled with its revenue growth math a little bit in its prospectus, GrubHub is growing rapidly in mobile usage, reporting that 43% of all orders were placed via mobile platforms.

3 million of the offered shares were sold by insider private equity and venture capital backers Warburg Pincus, Thomas H. Lee Partners, Benchmark Capital, and Goldman Sachs. GrubHub co-founder and CEO Matt Maloney sold just less than 500,000 shares, or about one-fifth of his stake.

Potential competitor Yelp was down 3.5% in trading on Friday morning.

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