New York, New York--(Newsfile Corp. - January 17, 2020) - Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in Grubhub Inc. (NYSE: GRUB) ("Grubhub" or the "Company") of the January 21, 2020 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
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If you invested in Grubhub stock or options between July 30, 2019 and October 28, 2019 and would like to discuss your legal rights, click here: www.faruqilaw.com/GRUB. There is no cost or obligation to you.
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The lawsuit has been filed in the U.S. District Court for the Northern District of Illinois Eastern Division on behalf of all those who purchased Grubhub securities between July 30, 2019 and October 28, 2019 (the "Class Period"). The case, Azar v. Grubhub Inc. et al, No. 19-cv-07665 was filed on November 20, 2019, and has been assigned to Judge Charles R. Norgle, Sr.
The lawsuit focuses on whether the Company and its executives violated federal securities laws by failing to disclose that: (1) customer orders were actually declining, despite the massive investments that the Company had made to spur demand for and use of its platform; (2) Grubhub's new customer additions were generating significantly lower revenues as compared to historic cohorts because these customers were more prone to using competitor platforms; (3) Grubhub's vaunted business model under which it secured exclusive partnerships had failed, and Grubhub needed to engage in the same aggressive non-partnered sales tactics embraced by its competitors to generate significant revenue growth; (4) Grubhub was required to spend substantial additional capital in order to grow revenues and retain market share in the face of heightened competitive dynamics and market saturation, eviscerating the Company's profitability; and (5) Grubhub was tracking tens of millions of dollars below its revenue and earnings guidance and such guidance lacked any reasonable basis.
On October 28, 2019, Grubhub announced deeply disappointing financial results for its third fiscal quarter of 2019. The Company revealed that an important Company demand metric, daily average grubs ("DAGs"), had actually fallen 6% sequentially despite an increase in active diners and the Company's highly touted demand initiatives. The Company also slashed Grubhub's 2019 earnings and revenue projections and stated that the Company would achieve only $100 million in EBITDA for 2020, more than 70% below market expectations.
On this news, Grubhub's stock price fell from $58.39 per share on October 28, 2019 to a closing price of $33.11 per share on October 29, 2019-a $25.28 or 43.30% drop.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Grubhub's conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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