NEW YORK (TheStreet) --Shares of food delivery service provider GrubHub (GRUB) - Get Report are declining by 11.27% to $38.50 on heavy trading volume on Wednesday afternoon, despite the company reporting better than expected third quarter results.
GrubHub's adjusted earnings of 23 cents per share beat expectations by four cents. Revenue of $123.5 million soared above forecasts of $118.5 million for the quarter.
The company's founder and CEO Matt Maloney appeared on this afternoon's "Bloomberg Markets: Americas" to discuss the latest earnings performance and what to expect from GrubHub going forward.
Maloney began by addressing why the stock is plunging so much when the company "crushed it" in the third quarter. Simply put the CEO doesn't know why the stock is declining today.
"It's a great year, it's a great quarter, we're reenergized," Maloney said. He mentioned that he heard some talk of weak EBITDA, but reiterated the strong quarter and noted that the company is looking forward to "driving this home next year."
BloombergTV's Scarlett Fu questioned Maloney about the quarter on quarter decline in the average daily grub, a metric some people watch closely. She asked what Maloney attributes the dip to, noting that ordering in or eating out doesn't have seasonal trends as the tech industry does.
Maloney disagreed saying there are "tremendous" seasonal fluctuations in the year. "Our second and third quarter are always lower, in fact usually the third quarter growth is dramatically less than the second quarter growth," he continued. "And we had so much acceleration this quarter that we're actually up in terms of orders quarter over quarter by 3%, which is pretty unprecedented in our industry."
BloombergTV's Matt Miller asked Maloney about increasing competition in the space.
"It's an over $100 billion addressable market and we're not even going to process $3 billion and we're more than an order of magnitude larger than everyone else. And multiple orders of magnitude than any of the competitors [Miller had] mentioned."
The company is posting its best quarter in over 12 months, the CEO continued. All of the competitors have been in the market for over a year and this is a sign that it has not impacted GrubHub's growth.
"This industry could be big enough for a bunch of players, all I know is that we're crushing it," Maloney said.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate GRUBHUB INC as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
You can view the full analysis from the report here: GRUB