The DoorDash stock soars after the initial public offering


SAN FRANCISCO – Wall Street loves the epidemic winner.

Shares of DoorDash jumped on their first trading day on Wednesday, the upper limit of a year of oversized growth for the country’s largest food supplier. The DoorDash stock opened at $ 182, up 78 percent from the initial $ 102 public offering price. The company raised $ 3.4 billion, making it the largest initial public offering of the year. Its opening trade valued the company at $ 69 billion, along with stock options, which exceeds the market capitalization of Domino Pizza and Chipotle Mexican Grill.

Investors accumulated in the portfolio despite heavy losses from DoorDash and an intensely competitive market. In the week before it went public, DoorDash focused on the price to $ 92.5 per share at 16 percent before the price was even higher. The pandemic had a beneficial effect on the company as people turned to transportation services while getting stuck in their homes.

Tony Xu, CEO of DoorDash, said the company, as a state-owned company, is trying not to “chase the scoreboard” and stock market hype. “I note the significance of the milestone and the moment, but there is a day on this multi-decade road,” he said.

DoorDash’s stock ad announces a week for technology startups to publicly bid. Airbnb plans to price its offer later on Wednesday and will start trading on Thursday. The home rental company has already raised its offer price range once and could be valued at as much as $ 42 billion, far exceeding this year’s private market valuation of $ 18 billion.

E-commerce startup Wish, video game company Roblox and real estate startup OpenDoor also plan to list their shares before the end of the year. The events are expected to flood companies ’founders, employees and investors unexpectedly since 1999, the busiest year for IPOs, and more than 200 companies have been listed.

Many of these companies are losing money. Nevertheless, investors were largely warmly welcomed when they went public. Private investors estimated the Snowflake data warehouse at $ 12 billion before it went public in September. Since then, its valuation has risen to $ 107 billion.

The debut of DoorDash also shows the extreme economic differences created by the pandemic. Restaurants struggling with government-ordered closures are increasingly relying on transportation apps like DoorDash.

Apps that would send armies of concert workers to take orders and fulfill orders charge fees that some restaurant owners say are cumbersome. In many cases, admission orders did not make up for lost revenue from indoor meals. This year, the chains went bankrupt, including Ruby Tuesday, the parent company of California Pizza Kitchen and Chuck E. Cheese.

But DoorDash flourished. In the first nine months of the year, revenue more than tripled from the same period last year to $ 1.92 billion. Orders rose to 543 million by September, up from 181 million a year earlier.

Prior to its IPO, DoorDash announced a $ 200 million pledge for various programs to help restaurants and drivers. He invited several restaurant owners and deliverers to attend the opening ringing of the stock market and presented them in outdoor marketing campaigns around New York and San Francisco.

Despite the rapid growth of DoorDash, it burns cash. It lost $ 149 million in the first nine months of the year and warned investors that growth triggered by the epidemic is likely to slow.

Mr Xu said the company continues to spend money to grow “in proportion to the opportunity”.

David Hsu, a professor of management at the University of Pennsylvania, said DoorDash’s “astonishing” assessment has led investors to overemphasize the consequences of the epidemic. “When you get to that market ceiling, the question arises, where to go next?” he said.

DoorDash has recently won a long battle over hiring contract workers. Last month, Californians passed proposal 22, a voting measure that would exempt DoorDash, Uber, Lyft and others from a state law that would have required them to treat their drivers as employees. . Companies are expected to push for similar rules in other states.

DoorDash has grown in part by focusing on suburban markets and forming partnerships with large retail chains. Founded in 2013 by Mr. Xu, Stanley Tang, Andy Fang and Evan Moore, the relentlessly competitive market has survived longer than many of its competitors. This year, two players, Grubhub and Postmates, were acquired by major rivals.

Through the deal, DoorDash remained independent. It has millions of drivers and 18 million customers in the United States, Canada and Australia.

The company has experimented with various business models, including a subscription service, DashPass, which costs $ 9.99 a month for unlimited shipments. DashPass has five million subscribers.

DoorDash has also begun operating commission buildings where restaurants can rent space and prepare meals specifically for deliveries. He has also partnered with grocery stores, pet food manufacturers and drugstores. The company has even invested in local restaurant Burma Bites.

A series of technology IPOs will provide a long-awaited return for venture capitalists. Many decades of listed companies. Abundant risk finance has allowed “unicorn” start-ups with a value of more than $ 1 billion to postpone going public, as long as the pressure to stifle profits.

Sequoia Capital, which has supported Airbnb, DoorDash, Snowflake and several other major start-ups this year, is expected to reap benefits. In the same way, the Founders Fund, Airbnb and Wish are large corporations. And the Japanese conglomerate, SoftBank, crushed by bad bets from WeWork and other office rental companies, can be redeemed with investments from DoorDash and OpenDoor.

Matt Phillips contributed to the report.