(Reuters) – GrubHub Inc’s (GRUB.N) plan to expand its network will need a lot of money and take years to realize, Wall Street analysts said on Tuesday, casting doubts on the online food delivery company’s ability to improve profits in the face of burgeoning competition.
Shares of GrubHub slumped 34% in early trading, after it forecasted slowing revenue growth for the fourth quarter, pushing at least two brokerages to downgrade the stock and cut their price targets.
“Most concerning is that the new strategic plan is unproven, creating greater uncertainty,” Guggenheim analysts said, shedding their rating on the stock to “neutral” from “buy”.
GrubHub, one of the early pioneers in the industry, has been battling growing competition from startups such as DoorDash and Uber Technologies’ (UBER.N) Uber Eats.
In response, the company has spent heavily on promotions to attract customers. The Chicago-based company has also tried to increase its market share by partnering…
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