In the following video, I cover the three main points of my short thesis for GrubHub (NYSE:GRUB). My three main points are:
- GRUB's price to earnings ratio of 69 represents a baked-in expectation of 3 years compounding growth at 30% per year. I believe this is a lofty valuation.
- Two huge competitors have entered GRUB's space and there's been little coverage! CEO Matthew Maloney's political comments have distracted analysts.
- Mr. Maloney has recently cashed out of millions of dollars in stock. His generous stock compensation comes at the investor's expense. Investors may want to follow his lead, protecting against a drop in GRUB's stock price.
Avoid GRUB to reduce the risk of capital destruction.
Disclaimer: This article represents the opinion of the author as of the date of this article. This article is based upon information reasonably available to the author and obtained from public sources that the author believes are reliable. The author does not guarantee the accuracy or completeness of this article. This presentation is the author's interpretation of the information contained in the article. The author may close his investment position at any point in time without providing notice. The author encourages all readers to do their own due diligence. This is not a recommendation to buy or sell a security.
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Disclosure: I am/we are short GRUB.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: owns puts