Investors Having Reservations About OpenTable: Stock Tanks 67% Since Record High in April
OpenTable Inc.’s (NASDAQ:OPEN) investors are having reservations about its stock during these tough economic times and slow expansion plans.
After entering the listed market in May 2009 and seeing its market value increase by three times at 2010’s end, the company is now facing tough times. Since hitting a record-high share price of $115.62 in April, the stock has since tanked 67%. Domestic competition has heated up from Livebookings Ltd. and Google Inc.’s (NASDAQ:GOOG) less expensive offerings.
Online Reservations Market
OpenTable is the market leader for U.S. reservations with more than 16,000 restaurant subscribers; next year, this may reach 20,000, according to a Bloomberg article. Restaurant owners pay for OpenTable’s computer system, allowing them to oversee table inventory and keep a picture of dining customers.
But this can come at high prices.
San Francisco’s Luna Park restaurant, which offers $20 entrees, has estimated that OpenTable contributes about 60% of its reservations while having to pay a monthly bill as high as $2,351.
Matthew Roberts, OpenTable’s (NASDAQ:OPEN) CEO, disagrees this is costly and explained that for every $1 OpenTable fee for logged reservations, an average of $43 was spent by diners in North America.
One possible city that OpenTable could explore is Dallas as well as international expansion, but Livebookings will give OpenTable a run for its money with its 9,000 subscribers. The large European online reservation provider started a free U.S. service in November that allows users to make reservations through their personal websites and Facebook.
While OpenTable has 64% of San Francisco’s reservation restaurants as subscribers, it may be hitting a wall in other large cities with its numbers. Roberts has disputed this and said recently that an estimated 37% of a possible 35,000 reservation-taking restaurants encompass the U.S. market.
Then there’s Google (NASDAQ:GOOG) with its recent Zagat takeover, which has affected OpenTable’s shares. Google could employ Zagat as a restaurant-booking service, giving OpenTable additional competition.