By
Bhushan Akolkar
April 12th, 2024
The food delivery company went public on the New York Stock Exchange Wednesday starting the day with its DASH stock at $182 per share and closing at $189.51.
Trading under the symbol DASH, with JPMorgan and Goldman Sachs as the main underwriters, DoorDash Inc had a market value of about $60.2 million at closing. This is a huge leap from a $16 billion value earlier this year.
This comes as a huge and much-needed gain for Softbank Vision Fund, the largest shareholder with a stake of about 20%. Softbank missed out on Slack’s 44% valuation spike resulting from its $27 billion sale to Salesforce.com Inc (NYSE: CRM) last week. It sold its stake in Slack IPO before last week’s sale.
DoorDash has experienced a surge in business in recent months due to an increase in demand for delivery services. With more people staying at home and opting to order in rather than go to a restaurant, DoorDash now has 18 million customers. The delivery service has recently branched into making drop-offs for grocery, pet and convenience stores. It now has 390,000 merchants and 1,000,000 plus delivery workers known as dashers.
Market Analysis: Chances for DoorDash and Its DASH Stock
Rohit Kulkarni, an analyst at MKM Partners had asserts that food delivery is “the last frontier of e-commerce”.
Kulkarni predicts a “three-course race” in the food delivery business listing DoorDash, Uber Technologies Inc (NYSE: UBER) and Instacart as the main contenders. Instacart is also soon to go public. Kulkarni believes that the ‘profitability of the industry is going to rise and all three can win’.
CNBC’s Jim Cramer cautions investors, especially young investors who are familiar with the brand to not “forget their discipline”.
D.A. Davidson’s Tom White, Managing Director and Senior Research Analyst pointed to what he saw as key catalysts for the company:
“When we get a widely deployed vaccine, we do expect competitive intensity to tick up here. I’d point to a couple things, though, that we think point to these guys being able to gradually improve profitability and probably get to 20%-plus EBITDA margins here in a reasonable time frame. One, the cohort data … really sort of underpins, we think, that road map. In a lot of that cohort data, we were seeing the trends even pre-pandemic.”
Virtus Investment Partners’ senior managing director, Joe Terranov noted a “fascinating” trend in Wednesday’s trade. He observed that while the emerging growth company, had a successful IPO, some “momentum-type names” were clearly losing money.