GrubHub down 30% after a terrible earnings cause analysts to bail

Shares of food delivery company GrubHub tanked nearly 40% after disappointing earnings and dismal guidance forced Wall Street to abandon the already struggling stock.

GrubHub received five downgrades, including double-downgrades from both Bank of America Merrill Lynch and Oppenheimer, where the firms flipped from recommended buying the stock, to selling.

“Competitive food delivery offerings (Uber, Doordash and others) are eroding GRUB usage and expected to worsen in 4Q, suggesting historical [long tern value] is no longer reliable,” said Oppenheimer analyst Jason Helfstein, who slashed his price target on the stock to $34 from $91.

GrubHub has lost more than half of its market value this year as competing food delivery services pressure fundamentals. GrubHub reported third-quarter revenue of $322 million, missing estimates of $330.5 million, according to Refinitiv.

Earnings came in line with expectations at 27 cents per share. Orders decreased 15% since the same period last year, drom thepping further fro second-quarter decrease of 11%.

The weak spot of the report was the company’s fourth-quarter guidance that wrecked analysts hopes about the rest of the year. GrubHub said it sees fourth-quarter revenue in a range of $315 million and $335 million, well below the forecast $388 million.

“The food delivery market is increasingly irrational as competitors flood the market with rewards and incentives, making online diners less loyal,” said Bank of America analyst Nat Schindler in a note to clients.

To combat this irrationality, GrubHub will focus on adding non-partner restaurants, expanded national chain integration and diner promotions.

“We think this will accelerate industry consolidation, but GRUB has a weaker currency than the two largest players and we see limited investor demand with slowing growth and declining EBITDA,” said Helfstein.

—with reporting from CNBC’s Michael Bloom.