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DoorDash's Wall Street Debut: $3 Billion IPO


DoorDash, a third-party logistics company mainly on food delivery and takeout, amassed $3.37 billion in their IPO, as they became the 3rd largest listing in the U.S this year. This feat was only exceeded by Bill Ackman’s $4 billion blank-check company and the software-making company, Snowflake Inc., with a total of $3.86 billion including so-called greenshoe shares. DoorDash managed to sell 33 million shares for $102 per share, surpassing the final pricing range from their marketed amount for about $90-95 per share. The American food delivery and takeout startup succeeded in maximizing opportunities given this pandemic concerning the demand for “food delivery right at your doorstep”, proven by their more-than-doubled revenue in their first 9 months of operation year-over-year in the 3rd quarter caused by increasing customers. With DoorDash’s IPO, companies in the U.S exchange have now raised more than $160 million in IPOs this year, making the year 2020 to be the busiest year for IPO’s ever since 1999.


How are they performing to the point it applied for IPO? Looking at its performance, In the nine months which ended in September 30th, Doordash has brought in nearly $1.9 billion in revenue, which has rose $587 million in the same window in 2019. Analytics firm, Second Measure, also estimates that DoorDash and its related business had a roughly 50% share of U.S. delivery sales in October, the same month where it grew 135% on meal delivery services. On the other way, DoorDash also narrowed its net loss to $149 million over the same period in 2020, meanwhile, in 2019, DoorDash had a net loss of $533 million over the nine-month period. DoorDash stated that it has 1 million dashers (delivery workers) and over 18 million customers. There are also more than 5 million customers on its $9.99 per month DashPass Service as of September 30th, through Dashpass Service, it provides a free delivery service from restaurants that are part of the program. DoorDash’s performance and abundant users triggered optimism towards it, but Jim Crammer, the “Mad Money” host, on the contrary, stated on Monday (12/7) “DoorDash is a terrific story, but its business could slow dramatically next year, so I recommend being careful with it.” he said. “If you can get it for $100 or less, you’ve got my blessing. Otherwise, sorry, you had to get in on the deal because you can’t chase these.”


Valuing at a massive $156 billion, December 2020 is set to be the busiest year-end on record for IPO, surpassing the $8.3 billion mark set in December of both 2001 and 2003. Besides DoorDash, Airbnb is ready to start trading this week in long-awaited listings. If both startups are combined, they will reach an enormous $6.2 billion at the top of their price ranges. Airbnb itself was valued at $18 billion in April 2020 after raising additional debt, and it grew continuously to $42 billion at the top of the revised range in December. The elevated price target put Airbnb to be one of the five biggest US IPO in 2020. The company, which was bumped hard by international travel restrictions amid the current time, has more recently seen a boom in customers seeking longer-term and future travels. As most private companies sat out the market at the beginning of the period, they are now in droves wanting to apply for IPO, as also the long-awaited US once in a four-year election had come to an end. "This group of companies that you have coming out now maybe wasn't thought of initially as benefiting, but they've been able to show very strong results despite the coronavirus," said Karen Snow, head of East Coast listings at Nasdaq Inc. Alongside DoorDash and Airbnb, three mega listings that will increase the total record of this year's IPO are Affirm Holdings Inc., Roblox Corp., and ContextLogic Inc. In essence, shown by US Mega IPO Week, investors and companies are becoming more optimistic about the nation's economic growth, stability, and future treatment for COVID-19.


Sources:

Bloomberg

CNBC

CNN

Forbes


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