OpenTable Trading Higher as Morgan Stanley Takes 5.9% Passive Stake

OpenTable

is up 2% this afternoon on the news that Morgan Stanley has taken a 5.9% passive stake in the company.

This is good news for the restaurant reservations site, which has been struggling (and failing) to maintain its share price over the past few months. After achieving an all-time high of $115.62 on April 25, 2011, OpenTable began to tank faster and more sharply than a Disney World

roller coaster. Granted, Disney's coasters aren't the steepest on the market. But while OpenTable's downfall hasn't been as fast and furious as a Cedar Point coaster, it's definitely on par with Splash Mountain. Unfortunately, the ride never seemed to stop. By June 20, OpenTable had lost more than 30% of its value, trading at $73.99. While shares began to pick up shortly after that (rising all the way to $89.56 on July 5), the company would later continue its descent, dropping all the way to $57.67 on August 8. By September 22, OpenTable was trading at $43.55 per share. As of November 2, the stock had dropped to $38.27. Today's pickup provides a much-needed boost for the company, which made its public debut on May 21, 2009. Rising well above its offering price of $20 (just like

), OpenTable held steady during its initial four months of trading. From then on, the company began to ascend. With every decline, the company only seemed to come back even stronger. That strength seems to have dwindled now, causing many analysts to downgrade and/or reduce their price targets on OpenTable. Oppenheimer was

, reducing its PT from $93 to $54. “While widely expected, we're reducing our 2011 estimates to reflect slowing diner growth, partly driven by the macro environment, maturing US restaurant additions, and volatility in revenue per diner,” Oppenheimer wrote. “However, we believe OPEN still has plenty of growth ahead, as we continue to view its business as a natural monopoly, where the network effect should drive very high market share, as compared to 42% and 7%, US and international share today, respectively.” Bank of America

from Buy to Neutral, saying, “We are downgrading OpenTable to Neutral (from Buy) as we believe the stock will be range bound (an already large short interest may limit downside) as the Street digests 3Q results including: 1) lower seated diner growth trends; 2) the cancelation of Spotlight; 3) limited near term benefits from TopTable integration; 4) commentary on softer industry trends in October vs. September, but little clarity on what they could mean for OpenTable's growth.” Benchmark

from $60 to $50, leaving Citi as one of the view financial services firms to maintain its previous position. “We view OPEN as a core holding,” Citi

. “Our Long Thesis remains largely unchanged, and we believe OPEN's growth & profitability outlook are very solid – due to its high visibility revenue model (subscription/utility), still early stage secular penetration (only 11% of U.S. seated diners), and very high operating leverage (50%+ incremental margins).” However, as of November 1 Citi reduced its PT from $82 to $67.