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Despite making revenue, the US leading food delivery app Doordash has also suffered a loss of almost $149 million.
On Friday, DoorDash filed its IPO prospectus with the Securities and Exchange Commission (SEC). Following the successful filing, the company expects to use the symbol DASH to list its shares on the New York Stock Exchange (NYSE).
DoorDash Ahead of Its IPO
During the 9 months up to September, DoorDash reported a 200% increase in profit at about $1.9 billion from the $587 million it was last year. However, despite registering good revenue, it also made a net loss of $149 million. The good thing is that the loss for the previous nine months was more narrow compared to the $533 million loss it got at the same period in 2019.
As of Sept. 30, more than 5 million customers are enrolled in the DashPass service. Through its customers free delivery program, the company has now accumulated over 18 million customers with the help of its 1 million Dashers (delivery workers).
Per a startup funding tracking firm Pitchbook, the company has managed to raise total capital worth almost $3 billion after a recent private funding round in June that gave it $400 million. Analysts now estimate the startup to be valued at $16 billion even though the prospectus failed to specify the selling value of its shares.
Gig Economy Businesses Transforming Food Delivery Services
Since it has now gone public, DoorDash has joined other gig economy companies who have taken that route in the past. The firm’s performance has made many market watchers question whether gig economy businesses – which mostly rely on contract workers – are profitable. Restaurants, customers and drivers are usually connected via Doordash’s service in facilitating takeout orders.
Last week, a proposition that DoorDash, together with other gig companies backed, was supported by California Voters. The proposition that California’s new labor law wants to change permits those companies to retain their workers as contractors instead of employees.
Even though the proposition does not offer additional protections for those workers, gig companies such as DoorDash and Uber Technologies Inc (NYSE: UBER) would benefit from such a worker structure as it helps them avoid unemployment insurance and time off expenses.
Following the recent developments, the company’s chief executive Tony Xu has stated that the company would spread similar proposal throughout the country as it expands beyond the food delivery business into other convenient local businesses. He added that the goal was “to build products that transform the way local merchants do business and enrich the communities in which they operate.”
According to the company, low cost and ease of switching between food delivery options as well as intensified competition could potentially threaten its future business despite being a food delivery powerhouse in US markets.
IPOs on Boom This Year
Earlier this year, DoorDash began the quest to go public having confidentially filed its documents with the Securities and Exchange Commission. However, due to the effects of the pandemic, the IPO market was halted, prompting DoorDash together with other similar delivery firms to focus on the huge customer demands- as most people stayed at home.
Fortunately, the booming stock market in the late summer influenced many tech IPOs to emerge – where notable public debuts included Snowflake, a data warehouse company, and Palantir, a data startup company. The momentum of seeking for IPOs still continues with Airbnb also expected to file its prospectus this month.