(Bloomberg) -- An increase in GrubHub Inc. short selling this year paid off handsomely for bears on Tuesday after the food-delivery company downgraded its growth and profit expectations due to fierce competition.
About 20% of shares available to trade were on loan to short sellers on Monday or about $1 billion worth, according to data compiled by IHS Markit Ltd. While that was down from a high of 23% in August, it’s up from 11% at the start of the year. GrubHub tumbled 44% on Tuesday, shedding more than $2 billion in market .
“After taking the position down amid the rally last fall, short sellers have added to the position consistently over the 12 months and it paid of in a big way today,” said Sam Pierson, Markit’s director of securities finance.
Kynikos Associates founder Jim Chanos has been among short sellers who have targeted GrubHub, which owns a platform that matches diners with restaurants and food-delivery drivers. Last month, he told CNBC that increased competition and low wages for drivers were central to his bearish thesis. His firm didn’t respond to an email seeking a comment on Tuesday.
GrubHub has now fallen 77% from a record high in September 2018.
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