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DoorDash Prices IPO at $102 per Share Raising Its Valuation to Over $32B

UTC by Steve Muchoki · 3 min read
DoorDash Prices IPO at $102 per Share Raising Its Valuation to Over $32B
Photo: DoorDash Blog

As governments push for an efficient coronavirus vaccine by mid-2021, DoorDash management expects revenue and business operations to moderate in the following years.

Leading American on-demand prepared food delivery service DoorDash Inc is reported to have increased the price of its shares in the awaited IPO to $102 per share. Initially, the company had set a price per share between $90 and $95. Based on its past performance particularly at the height of the coronavirus pandemic, investors are optimistic the shares will perform better before the market fully recovers.

According to news outlet CNBC, as a result of a successful IPO on Tuesday, the company is now valued at $32.4 billion based on common stock outstanding and $38.7 billion on a fully-diluted basis.

Having secured a huge cash reserve, it makes it the latest public unicorn and therefore capable of widening and improving its core business to be more competitive. However, the company warns that things might not be as rosy as they have been during the height of the coronavirus pandemic. As governments push for an efficient coronavirus vaccine by mid-2021, DoorDash management expects revenue and business operations to moderate in the following years.

“The circumstances that have accelerated the growth of our business stemming from the effects of the COVID-19 pandemic may not continue in the future, and we expect the growth rates in revenue, Total Orders, and Marketplace GOV to decline in future periods,” the company noted in the IPO prospectus.

DoorDash IPO and Market Insights

Having doubled its private valuation during Tuesday’s IPO, DoorDash is in a better position of competing with its established competitors including Uber Eats, and also GrubHub. Notably, the San-Francisco based startup is said to control up to 50% of the U.S. food delivery market, thus making its public entry a significant milestone.

DoorDash has managed to cut its losses this year, whereby it clinched position 12 on CNBC’s Disruptor 50 list for 2020. Notably, during the first three quarters of 2020, the company reported a net loss of $149 million. However, it was a significant drop from last year’s similar period as it reported a net loss of $534 million.

According to DoorDash mode of operation, it 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. Apparently, the company is reported to have collected a margin of 23% from every order made through its platform this year, in comparison to a negative margin of 32% last year.

According to its quarterly earnings, DoorDash reported revenue during the third quarter was up 268% in comparison to last year’s similar quarter to $879 million. Additionally, the company had recorded revenue growth of approximately 214% during the second quarter.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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