Amid the busiest December for IPOs ever–and a red-hot market that’s soaring to new highs–shares of food delivery app DoorDash are surging 80% on Wednesday during the firm’s long-awaited first day of trading on the New York Stock Exchange, catapulting the firm’s market capitalization to more than twice its last private valuation six months ago.
DoorDash shares started trading at around 12:45 p.m. EST on Wednesday, surging 86% to $188 from an offering price of $102 per share on Tuesday, when the firm raised nearly $3.4 billion.
The skyrocketing shares pushed the firm’s market capitalization to about $59 billion, roughly four times higher than DoorDash’s last private market valuation of $15 billion in June.
The San Francisco-based company originally upsized its offering by proposing a maximum share price of $95 on Friday, up from a maximum of $85 per share when the firm filed to go public in November.
Founded in July 2013 by a group of Stanford students, DoorDash says it plans to use its IPO proceeds to up its game in smaller local markets such as suburbs, where it’s largely outperformed competition from rivals such as UberEats, Postmates and Grubhub.
In a year that’s now seen $160 billion raised in IPOs, DoorDash’s public market debut is the third-largest, behind those of a blank-check company sponsored by billionaire hedge fund manager Bill Ackman and booming cloud startup Snowflake.
The broader market climbed to new highs early Wednesday before falling slightly by midday trading, with the S&P 500 and Dow Jones Industrial Average each down less than half a percentage point when DoorDash started trading.
DoorDash “enters the public market as the dominant player in the food delivery space,” says market research firm Cardify, noting that the firm’s market share is greatest among food delivery, at 36% in November (Postmates was second at 33%). “DoorDash’s dominance seems to come from loyalty. While UberEats briefly eclipsed DoorDash on loyalty in the summer, it quickly fell below 60% loyalty while DoorDash retained more than 65% of customers month to month.”
“It took a global pandemic to drive the firm’s one quarter of profitability–the firm has not been profitable since, and we think it may never be,” said David Trainer, the CEO of investment research firm New Constructs, referencing a $23 million profit at the height of the pandemic in the second quarter. Investors shouldn’t expect its “breakneck revenue growth rates moving forward,” he adds, pointing to 268% sales growth year over year in the third quarter, “especially if Covid-19 vaccine efforts produce meaningful vaccination in the coming months, which would allow consumers to once again return to a more normal dining routine.”
DoorDash’s IPO minted three new billionaires: CEO Tony Xu, 36, and fellow cofounders Andy Fang, 28, and Stanley Tang, 27.
What To Watch For
Home rental giant Airbnb is set to debut on the Nasdaq on Thursday, but it’ll price its shares on Wednesday. On Monday, the firm said it planned to offer them up at between $56 to $60 each, up from the previously planned range of $44 to $50.
DoorDash IPO Delivers Three Billionaires As Wall Street Ignores A Menu Of Losses (Forbes)
Airbnb, DoorDash And Billionaire Tom Siebel’s C3.ai Are Upsizing Their Public Market Debuts, Revving Up Biggest December For IPOs Ever (Forbes)