Wall Street orders up GrubHub in IPO
NEW YORK – Wall Street appears to be in the mood for takeout.
Investors sent shares of GrubHub Inc. up more than 30 percent Friday in an initial public offering that gave the online food ordering service a market capitalization of nearly $2.7 billion.
The company is one of four making their debuts as publicly traded companies Friday. The others include health data service IMS Health Inc., which raised about $1.3 billion in its return to the market. All four companies have risen by double-digit percentages in morning trading.
The market for IPOs has been hot so far this year, especially for companies in the cloud software and biotech industries. Next week is expected to be busy, with about 15 companies expected to debut, including auto lender Ally Financial Inc., which has been under government control since the financial crisis, and hotel chain La Quinta Holdings Inc.
GrubHub and its rivals are changing the way people order takeout from restaurants. Instead of calling a restaurant, people can order meals online or through a few taps on a smartphone app, and can search through many restaurants at once by cuisine or other specifications.
GrubHub makes money by taking a percentage of each order. The company doesn’t say how much it charges, but restaurant owners have said it’s about 15 percent. The more that a restaurant pays, the higher it appears in GrubHub’s listings.
The company also owns Seamless, another online takeout company. GrubHub and Seamless merged in August, and both still operate separately. After the merger, the company named itself GrubHub Seamless, but has since dropped Seamless from its name. It also owns Allmenus.com and MenuPages, which posts menus from restaurants across the country.
GrubHub said it had revenue of $137.1 million in 2013, up 67 percent from the year before.
The Chicago company raised $192.5 million after pricing more than 7.4 million shares at $26 per share. That’s above the company’s previously expected range between $23 per share and $25 per share.
The stock is trading on the New York Stock Exchange under the symbol “GRUB.”
Shares surged $8, or 31 percent, to close at $34, and hit a high of $40.80 earlier in the session.