A DoorDash Inc. delivery person places an order in an insulated bag at Chef Geoff’s restaurant in Washington, DC.
Andrew Harrer | Bloomberg | Getty Images
DoorDash, the grocery delivery company that has seen soaring demand during the coronavirus pandemic, sold shares on its initial public offering at $ 102 a piece, up on price, according to people familiar with the matter.
Tuesday’s offering valued the company at $ 32.4 billion based on common stock outstanding and $ 38.7 billion at full dilution. The Company previously said Stocks are expected to sell between $ 90 and $ 95. The sources asked not to be named as prices remain confidential.
DoorDash is the first IPO in one Wave of consumer technology in the late year this includes the expected debut of Airbnb later that week, followed by e-retailers wish next week and fin tech company To confirm and children’s playmakers Roblox this month. The companies use a Stock rally after the elections and a clear indication of investor demand for high-growth technology that has led the market this year.
While a multitude of software and internet companies were swept away in the Covid-19 rally, few have seen DoorDash grow. Third quarter revenue rose 268% year over year to $ 879 million after increasing 214% in the second quarter. In the first nine months of 2020, DoorDash’s order volume increased from $ 5.5 billion in the previous year to $ 16.5 billion.
San Francisco-based DoorDash makes money by charging participating restaurants a commission that can reach 30% of an order, as well as a fee of a few dollars per order from consumers. DoorDash said in its prospectus that there are now 390,000 traders on the platform. This includes everything from fast food chains like Chick-Fil-A, Chipotle and MC Donalds to upscale restaurants that were forced to close their doors and switch to take-out and delivery earlier this year.
The company that ranked 12th on CNBC ‘ Disruptor 50 list for 2020 was able to cut its losses this year, but still reported a net loss of 149 million US dollars in the first three quarters after 534 million US dollars in the same period of 2019. DoorDash now makes at least one money with every order Contribution margin of 23% until September compared to a negative contribution margin of 32% in the previous year.
DoorDash controls approximately 50% of the U.S. grocery delivery market, well ahead of its competitors About Eats and GrubHub. The biggest overhang for the company could be uncertainty about how business will look in a post-Covid world, particularly with widespread vaccine adoption expected by mid-2021.
Should consumers go back to eating out instead of relying on delivery, DoorDash’s business could deteriorate. In the meantime, restaurants that tend to operate on very low profit margins are constantly looking for ways to keep their costs down, and there are Technology in the market to help them do this without relying on third-party apps.
As DoorDash warns in its prospectus, “The circumstances that have accelerated the growth of our business due to the effects of the COVID-19 pandemic may not continue into the future and we expect the growth rates in sales, total orders and marketplace GOV to decline in future periods. “
DoorDash CEO Tony Xu co-founded the company in 2013 in Palo Alto, California, where the service reached its first customers. Xu currently owns just under 5% of the company’s outstanding shares. SoftBank, the lan investment of $ 535 million in 2018 is the largest shareholder with around 20% of the shares, followed by Sequoia, which owns 16%.