Are investors hungry for another initial public offering from a consumer internet company? Restaurant take-out website GrubHub Inc., slated to price its IPO this evening, is about to find out.
So far, the offering appears to be on track. In a sign investors were salivating over the deal, GrubHub raised it pricing expectations for the offering on Tuesday.
Bloomberg News The company and existing investors expect to sell about 7 million shares for $23 to $25 apiece, raising up to $176 million, according to a regulatory filing. That's up from an earlier estimate of $20 to $22.
GrubHub charges restaurants a commission on orders booked through its take-out ordering service, which diners access through a Web browser or the company’s mobile application. Last year, it worked with 28,800 restaurants in 600 cities, according to the filing. It processed more than 135,000 revenue-generating orders a day across its platform (which the company calls "Daily Average Grubs"—how's that for an atypical financial metric).
The company's revenue jumped 67% last year, partly thanks to its merger with New York-based Seamless. It has been profitable the last few years, even as it has increased its spending on sales and marketing.
The IPO follows recent debuts from other consumer-oriented Internet businesses like online-coupon software provider Coupons.com Inc.(COUP) and online retailer Zulily Inc.(ZU) Still more, such as online storage company Box Inc. and home-goods retailer Wayfair LLC, have moved toward potential IPOs slated for later this year, according to regulatory filings and Wall Street Journal reports.
And in the U.K. earlier Thursday, Just Eat PLC, another company that provides an online ordering service to restaurants, successfully listed on the London Stock Exchange(LSE.LN). The share sale gave Just Eat a market capitalization of £1.47 billion ($2.44 billion).
Mounting investor demand for fast-growing technology companies has fueled IPOs activity in the sector over the past year. But a March selloff in high-growth tech stocks showed buyers have their limits—particularly given the rich valuations for many of these companies.
Shares of Yelp Inc.(YELP) tumbled 19% in March while Angie's List Inc. slid 12%. The stocks are up about 0.9% and down 1.5%, respectively, on the year. Shares of online restaurant reservation booker OpenTable Inc.(OPEN) are up about 4.1%.
This year has seen 16 Internet and technology IPOs in the U.S., according to Dealogic. So far, the deals have rewarded investors who receive allocations—typically large investors like mutual fund and hedge funds—rising an average 31% from their offer prices through Wednesday, according to Dealogic.
Their returns for traders in the aftermarket, though, have been sluggish. As of Wednesday, these stocks were up an average 0.3% from where they opened in their trading debuts.
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