DoorDash is one of the most famous food delivery providers in the U.S. It is worth noting that shares of DoorDash jumped in its market debut on the New York Stock Exchange (NYSE) on Wednesday. As a reminder, the company priced its shares at $102 a price on Tuesday night. Interestingly, the stock began trading at $182 per share.
People should take into account that DoorDash joined its competitors GrubHub and Uber at a key time. Interestingly, the food delivery business flourished during the coronavirus pandemic, as people spend more time at home.
According to its IPO filing, the company reported $1.9 billion in revenue for the nine months ended September 30. As a result, compared to the same period of time in 2019, the revenue increased from $587 million to $1.9 billion. This is not the end of the story, as its revenue grew, the company also narrowed its net loss to $149 million over the same period in 2020. Importantly, last year the company had a net loss of $533 million over the nine-month period.
DoorDash and interesting details
It is worth noting that Wednesday’s public offering kicks off a busy season for market debuts. People should take into account that Airbnb is set to go public on Thursday followed by e-commerce Wish next week. Moreover, fintech company Affirm and kids’ video game maker Roblox.
Interestingly, the company makes money by charging a commission to participating restaurants that can reach 30% of an order as well as a fee of a few dollars per order from consumers.
However, the situation is more complicated than it might appear at the first glance. Recently, the District of Columbia Council passed a law that would cap third-party delivery and pick-up service fees at 15% of the order price during a public health emergency. The company wants to work with local policymakers to explain its position.
Importantly, DoorDash controls about 50% of the U.S. food delivery market. However, the biggest threat for the company may be uncertainty about what the business looks like in the future, after the pandemic. However, the company should prepare for different scenarios. This way it will be easier to adjust to the new reality.
At the moment the largest shareholder is Softbank, which owns about 20% stake, followed by Sequoia which owns 16%. DoorDash CEO and co-founder Tony Xu currently own just under 5% of the company’s outstanding shares.
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