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Bullish Waitr Analyst Calls Friendly Bear Short Call ‘Laughable’

Bullish Waitr Analyst Calls Friendly Bear Short Call ‘Laughable’

(Bloomberg) -- The latest bearish call on Waitr Holdings Inc. is “laughable”’ to Benchmark senior analyst Daniel Kurnos, who said the Wednesday note from “The Friendly Bear” on Seeking Alpha is “a bombastic, non-factual report.”

Shares fell 7.7 percent on Wednesday after the short report identified 45% downside in the food delivery company, calling it a “public market dine and dash.” The stock bounced less than 1 percent on Thursday.

A Waitr spokeswoman declined to comment on the report.

Bullish Waitr Analyst Calls Friendly Bear Short Call ‘Laughable’

Kurnos is unfazed by attempts from GrubHub Inc., Uber Technologies Inc. and DoorDash Inc. to muscle in on some of the southern states serviced by Louisiana-based Waitr. Other analysts are also now weighing in to defend the stock, with Hedgeye and Jefferies reiterating their bull calls in emails.

“Waitr is dominating where markets overlap because they don’t target low-end restaurants like GrubHub and DoorDash,” Kurnos said by phone. “They do dine in, mom-and-pop and less chains.” Partnering with local sports teams and businesses, Waitr has a competitive advantage because of its “hyper-local advertising strategy.”

The Friendly Bear, who decline to use their name publicly and identify as “short only,” maintain competition is fierce. “It is hard to fathom how one can reasonably expect a levered business with limited operating history to successfully compete against a company that has a license to burn cash in order to grow market share,” Friendly Bear said in an email, noting that DoorDash raised almost $1.2 billion since March 2018.

The short-seller added it’s “ridiculous” that Waitr provided Ebitda guidance last November but did not disclose it in its latest call on March 7. “The excuse that Waitr is a ‘growth company’ does not hold up. Was Waitr not a growth company in November 2018 when the proxy filing was filed?” Friendly Bear said by email.

Though leaving these estimates up to the imagination was an “unfortunate” move, Kurnos is undeterred, saying management doesn’t expect to rely on capital markets for funding this year.

As for minimum wage litigation highlighted in the Friendly Bear report, Kurnos noted the two class-action cases haven’t yet been certified. “The judge might throw it out - let’s see what happens,” he said. Acknowledging “the litigation is still in its infancy,” Friendly Bear responded that analysts need to look closely into whether Waitr is meeting its minimum wage obligations.

--With assistance from Joshua Fineman.

To contact the reporter on this story: Rebecca Choong Wilkins in New York at rchoongwilki@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Scott Schnipper, Sebastian Silva

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