The Postmates IPO is a hotly anticipated IPO, considering shares of its rival Grubhub Inc. (NYSE: GRUB) have soared 64.10% so far in 2017.
That's not to mention red-hot industry growth. The U.S. food home-delivery market will climb from $43 billion in 2017 to $76 billion by 2022, according to investment firm Cowen.
That's a 76.74% increase in just five years.
That sort of growth has investors eager for Postmates, one of the newest companies in the online food-delivery industry, to go public.
Postmates delivers orders customers placed on their smartphone app from chains and local restaurants - just like Grubhub does - and it also delivers alcohol to customers 21 and older.
But hopeful investors will have to wait at least two more years to buy Postmates stock, as CEO Bastian Lehmann said an IPO won't be held until 2019, according to Forbes.
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That's leaving investors bullish on this new industry torn between buying Grubhub stock now or holding out for the Postmates IPO date.
There's actually a third option, and it might surprise you...
Your Next Double-Digit Profit Opportunity in the Food Industry
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The next titan of the food-delivery industry might actually be Facebook Inc. (Nasdaq: FB).
You see, on Oct. 13, the social media giant entered the online food-delivery business.
Through its "Order Food" option in the Facebook smartphone app, users can browse restaurants in the area that offer delivery and take-out options. Facebook is partnering with smaller delivery services like EatStreet, DoorDash, ChowNow, Olo, Zuppler, and Delivery.com, according to TechCrunch.
It's also working with restaurants directly for take-out options, and those restaurants include:
- Jack in the Box
- Five Guys
- Papa John's
- Wingstop
- TGI Friday's
- Denny's
- El Pollo Loco
- Chipotle
- Jimmy John's
- Panera
When a Facebook user decides what they want, they click "Start Order," and the food preparation begins.
Right now, FB CEO Mark Zuckerberg is not charging participating restaurants and delivery services fees or sharing in profits from the orders placed via Facebook.
That's because he's thinking bigger...
Zuckerberg doesn't need to take a cut of the $3.99 online delivery fee that services like Postmates charges. Instead, he's going after the U.S. digital advertising sector, which will account for 46% of all advertising by 2022, according to Forbes.
With Facebook offering food delivery, restaurants will want to increase their ad spending on FB to reach more customers. Five Guys, for example, could eventually pay to have an ad for a cheeseburger that takes users directly to Five Guys' "Order Food" section on Facebook when they click on the ad.
And with Facebook's 1.37 billion daily active users, restaurants have billions of customers they could reach each day.
Facebook partnering with smaller delivery services and restaurants directly is going to limit the amount of revenue Grubhub and Postmates can make. If you're holding out on the Postmates IPO in hopes of capturing 64% returns like Grubhub, the entrance of a $500 billion giant like Facebook in the online delivery market could dash your hopes.
But it also means Facebook is primed to profit even more from the industry's growth.
While we see online food delivery as an additional catalyst for revenue growth, we don't have any hard numbers yet, since Facebook just rolled out its food service less than a month ago.
However, we do know online ad spending as a whole is increasing, which will continue to add to Facebook's revenue totals. Digital marketing spending is projected to climb from $72.09 billion in 2016 to $120 billion by 2021, according to Forbes.
That's a 66.45% increase in just five years. Because of forward-thinking moves like integrating food delivery into the Facebook app, Money Morning Director of Technology & Venture Capital Research Michael A. Robinson projects the FB stock price will reach $250 per share by 2020.
"There is no question in my mind at this point that Facebook will hit $250. The only question is when, and 2020 strikes me as a solid forecast at this point," Robinson told me.
From today's opening price of $178.31, that's a potential profit of 40.20%. And while that's Robinson's prediction for 2020, that doesn't mean the Facebook stock price will stop climbing after it hits $250.
If there are two things Zuckerberg knows, they're how to scale a business and how to make shareholders a ton of money along the way.
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