GrubHub Inc (GRUB) Soars to New Highs on Monster Earnings, Outlook

GrubHub Inc (NYSE:GRUB) stock is on pace for its best day ever, thanks to impressive earnings

Jul 28, 2016 at 11:13 AM
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GrubHub Inc (NYSE:GRUB) is on pace for its biggest intraday percentage gain ever, adding 27.1% at $39.08 -- and hitting an annual high of $39.13 earlier -- after the food delivery company reported better-than-expected second-quarter earnings and revenue, and raised its full-year revenue outlook. CEO Matt Maloney also noted a record number of orders during the quarter. Shares of GRUB have torn through the $32 area that has given them problems in the past, bringing their year-to-date lead to almost 56%. 

This post-earnings bull gap is crushing many traders on Wall Street, though. Specifically, short interest on GRUB represents 14 times the stock's average single-day trading volume. This notably elevated indicator would suggest there's plenty of sideline cash to fuel an extended GRUB rally, should these bears throw in the towel -- as they've been doing in recent weeks. For example, short interest dropped by over 12% in the last two reporting periods. 

This pessimism can also be seen from GRUB options traders. The stock's 50-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 1.83. Not only does this show put buying has almost doubled call buying over the last 10 weeks, but it outranks 71% of comparable readings from the past year -- meaning there's been a stronger-than-usual bearish bias among these speculators. 

Going off this point, the August 30 put saw the largest increase in open interest during the past two weeks, and data from the major options exchanges confirms traders were largely buying to open positions here. In other words, traders have been betting on GRUB to fall below $30 by the close on Friday, Aug. 19, when front-month options expire. Even amid today's record-setting price action, GRUB put options are trading at six times the intraday norm. 

Analysts, on the other hand, are mostly upbeat toward GrubHub Inc (NYSE:GRUB), as 10 of the 17 covering brokerage firms recommend buying the stock. Still, considering seven analysts maintain tepid "hold" ratings, and the shares are now trading comfortably above their average 12-month price target of $31.71, it wouldn't be surprising to see some bullish analyst attention come GRUB's way

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