OpenTable's Menu Serving Up Trouble (OPEN)

"OpenTable is a stock that keeps me up at night," says Morningstar analyst R.J. Hottovy. "I do love the company, but the valuation is completely ahead of itself." - a quote from Barron's.

OpenTable, Inc. (NASDAQ: OPEN) is an online restaurant reservation service (opentable.com) that reported a nearly 10-point gain last week, according to Barron's, and the stock has roped about 160% to $65.19 since February, allotting the company $1.5B since becoming public last year.

Barron's reports that "such growth initiatives could prove increasingly important if competition heats up, as some analysts fear and restaurateurs hope. Targeting smaller restaurants, Urbanspoon rolled out its Rezbook iPad application nationwide this summer, and has signed up 200 eateries for a monthly fee of $99. High switching costs will keep many OpenTable customers in the fold, but Eric Banh, owner of two Monsoon restaurants in Seattle, says he plans to switch to Urbanspoon. "The growth of Rezbook will be substantial, due to ease of use, cost and mobility," Banh says."

OpenTable has been "driven by a 23% increase in participating restaurants, [and] handily beat analysts' second-quarter estimates, is on track to earn $14 million this year and $22 million next. Last year it posted net of $7.33 million, or 33 cents a share. Under CEO Jeffrey Jordan, 51, former president of eBay's (NASDAQ: EBAY) PayPal division, it has developed several promising programs, such as Spotlight, which allows customers to buy discounted vouchers for popular eateries." according to Barron's, which also believes that even OpenTable insiders doubt the viability of the company, and have unloaded ~$25M of stock in the last six months.

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