Grubhub drops 40% on its worst trading day, provoking a laugh at the earnings call

When you suffer or have the worst trading day in the company's history, you laugh or cry.

For executives and at least one analyst who forgot he was not dampened by Grubhub's (GRUB) latest earnings call, the response was only after shares in the food delivery company had more than 40% weight on the results of mixed results in the third quarter and disappointing future guidance.

Revenue guidance for the current quarter was only $ 315 million to $ 335 million, compared to the lowest estimate of Bloomberg analysts surveyed at $ 368 million. In a letter to shareholders ahead of the revenue call, CEO Matt Maloney and CFO Adam DeWitt noted that the company would step up efforts to add non-partner restaurants to the Grubhub platform.

At the end of the call, Maloney answered an analyst's question about why restaurants might want to be sold to pay to partner with Grubhub rather than sell through the platform as a non-partner.

“Why would a restaurant choose to partner when they have a non-partner partner option? That's because the food experience sucks, ”Maloney said, prompting the laughter of a non-muted analyst. "The volume is far lower, the food is not that accurate … there is no way to solve the problems, there are less accurate delivery times, they will not have marketing on our platform."

Maloney gave an example that illustrates this by explaining that a Grubhub diner who wants to order a cheeseburger would be directed to a paying partner restaurant instead of a non-partner restaurant.

"We're going to do what we can to route demand to partner restaurants where the economy is not so miserable and the experience is better," he said.

But Maloney admitted the need to add non-partner restaurants to the platform to offer choices to customers in an increasingly competitive environment, such as Grubhub sees an ever-growing number of "promiscuous" eateries that are less loyal to just one food delivery platform. Although it would invest in loyalty programs in an effort to offset the drain.

Third-party analytics platform Edison Trends has been documenting this trend for some time, with delivery competitor DoorDash accelerating its market share this year. From October, company data shows DoorDash is increasing its share of the supply market. from 28% in February to about 35% while Grubhub has withdrawn from 27% ten l 23% in the same time period.

Grubhub has lost the supply market share to delivery competitors Uber and Doorber.

Wall Street was largely skeptical that Grubhub's plan could stop the bleeding, with analysts at Oppenheimer and Bank of America Merrill Lynch delivering rare double declines on the stock to Underperform, the same day the stock closed 43% lower.

Zack Guzman hosts YFi PM as well as a senior writer and reporter on air ing entrepreneurship, cannabis, startups and news on Yahoo Finance. Follow him on Twitter @zGuz .

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