In 2010, it took one Google search to see I should invest heavily in Netflix as it transitioned from DVDs to streaming. I bought in January and sold in November because NFLX quickly tripled. This move was premature and immature, but I made more than $10,000 per research hour. I netted enough after taxes to support two years of my life.
In September 2012, I saw the same situation: Netflix had equally strong plans that were equally underestimated. But, I didn't dive back in.
Then, I watched NFLX turn $100,000 into $1.3 million in less than three years. I did not harpoon myself because opportunities are everywhere. In 2016, GrubHub-Seamless Web (GRUB) looks like the Netflix of food.
Netflix invented its own industry to change the way we order movies, aiming to eliminate film rental's most infuriating quality: the late fee. A fun, addictive service empowering laziness enthusiasts, Netflix became a binge-watching phenomenon for both genders and for all ages.
It carved its own niche in the film industry by focusing on old movies, rather than new releases. Netflix became the trusted link between film lovers and studios. It deepened its usefulness by fixing its software and mining user data to fine-tune product offerings.
In 2010, Netflix was profitable. It had millions of subscribers in the US (and one other country), with plans to grab more growth first by streaming movies, and then by producing its own content. But in 2012, Netflix's stock was scorched.
Down 80 percent from its 2011 high, NFLX was plagued by a pessimistic perception from the press-and-therefore-public. Most of them assumed that the little company could not compete with the monstrous businesses like Google, Amazon and Apple that had started imitating Netflix's streaming specialty. This disconnect between short-term opinion (of the stock) and long-term success (of the business) created a temporary opportunity to turn a $500 investment into $6,500 in less than three years.
Once it became obvious that Goliath can't beat David at the game David has invented and dominated, Netflix skeptics flip-flopped to evangelists. NFLX became — among other things — the most successful stock of 2015.
This looks like GrubHub's story.
GrubHub invented its own industry to change the way we order takeout, aiming to eliminate food delivery's most infuriating quality: the phone call. A fun, addictive service empowering laziness enthusiasts, GrubHub became an impulse-ordering phenomenon for both genders and for all ages.
It carved its own niche in the food industry by focusing on small restaurants, rather than large franchises. GrubHub became the trusted link between food lovers and restaurants. It deepened its usefulness by fixing its software and mining user data to fine-tune product offerings.
In 2016, GrubHub became profitable. It has millions of users in the US (and one other country), with plans to grab more growth first by spreading rapidly, and then by providing its own delivery. But in 2016, GrubHub's stock has gotten scorched.
Down 25 percent from its 2014 IPO, GRUB is plagued by a pessimistic perception from the press and the public. Most of them assume the little company cannot compete with the monstrous businesses like Google, Amazon and Uber that have started imitating GrubHub's delivery specialty.
This disconnect between short-term opinion (of the stock) and long-term success (of the business) creates a temporary opportunity that I have not seen since Netflix in 2010 and 2012. Once it becomes obvious that Goliath can't beat David at the game David has invented and dominated, GrubHub skeptics will flip-flop to evangelists. GRUB's stock should be successful.
Listening to the first 12 minutes of GrubHub's latest presentation will tell you the following facts:
- Ninety-five percent of takeout and food delivery is still being done with paper menus and phones.
- GrubHub is starting to deliver for restaurants that don't deliver. (It recently added Fatburger and California Pizza Kitchen.)
- GrubHub's CEO forecasts that this plan will create 102-fold growth in online food delivery (implying 102-fold growth in users, sales and stock price if GrubHub maintains control of its industry, and if you believe in this long-term logic).
So, if you're addicted to ordering food online and interested in investing, you can be sure GrubHub will create large and life-changing stock gains.
Benjamin Cole and Find Fat Fish own shares of GrubHub. We did not receive compensation for this article, and we have no business relationship with any company stock that has been mentioned. You are responsible for your own investment decisions, and we are not liable for any errors or omissions.