GrubHub Short Sellers Win Big as Value Gets Cut Nearly In Half
GrubHub Short Sellers Win Big as Value Gets Cut Nearly In Half
(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 value.
“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.
--With assistance from Joshua Fineman.
To contact the reporter on this story: Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net
To contact the editor responsible for this story: Catherine Larkin at clarkin4@bloomberg.net
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