DoorDash announced Tuesday evening that its much anticipated initial public offering will price at $102 per share — far above its previously announced price range of $90 to $95 per share.
The upward swing in pricing gives the popular food delivery service a valuation of about $39 billion. Before turning to the public, it raised $3.37 billion privately.
DoorDash will offer 33 million shares of its Class A common stock on the New York Stock Exchange starting Wednesday under the ticker symbol “DASH.
The start-up is one of the many digital companies to benefit from the coronavirus pandemic. Already a leader in the food delivery space before the spread of COVID-19, the increase in customers ordering at home during the pandemic saw its market share soar to nearly 50%. Uber Eats is number two with a distant 28% share.
However, the company acknowledges in its prospectus that it expects its revenue, total order, and marketplace growth stemming from the pandemic to decline in future periods as eventually, customers will return to dining out.
Given the reality of the future, DoorDash wants to move beyond food and offer last-mile delivery for other types of local businesses. In September it announced a deal with convenience store chain, 7-11 for delivery and to create “Convenience Packs” with “groups of products that make purchasing common items from 7‑Eleven stores more convenient.”
The IPO will be led by Goldman Sachs and J.P. Morgan. Other underwriters include Barclays, Deutsche Bank Securities, RBC Capital Markets, UBS Investment Bank Mizuho Securities, JMP Securities, Needham & Company, Oppenheimer & Co. Inc., Piper Sandler and William Blair. The offering is expected to close on Dec. 11, 2020, subject to customary closing conditions.
Founded in 2013, DoorDash is one of the main technology-driven delivery players, with more than 18 million customers and 1 million “dashers” who deliver the food from its merchants. Its mission is to enable brick-and-mortar businesses to thrive “in an increasingly convenience-driven economy with rapidly evolving consumer expectations,” according to its Form S-1 Registration Statement.
The San-Francisco based company makes money by charging a commission of up to 30% on orders at participating restaurants as well as a fee of a few dollars per order from customers. DoorDash noted in its prospectus that there are now 390,000 merchants on the platform.
DoorDash CEO Tony Xu said that he founded the company in pursuit of helping small restaurants and local community workers to “fight the underdog” and succeed even in troubling and changing times like today.
“While small businesses are vital to our communities and created approximately two-thirds of net new jobs in the United States from 2000 to 2018, they now risk being left behind in the convenience economy where consumers have become accustomed to obtaining everything in a few clicks, a trend that has only accelerated in a COVID world,” Xu said in a letter attached to the IPO prospectus.
In its latest quarter ending September 30, 2020, DoorDash brought in $879 million in revenue compared to $239 million a year earlier, topping its $362 million in revenue during the second quarter of 2020 and $298 million in revenue for the first quarter of 2020. In the first nine months of 2020, DoorDash’s order volume climbed to $16.5 billion from $5.5 billion a year earlier. While DoorDash has narrowed its losses this year, the company still reported an overall net loss for the first three-quarters of $149 million, down from $534 million in the same period of 2019.
DoorDash is the latest tech company to go public this year, following Snowflake, Asana, and Palantir Technologies. Meanwhile, companies including Airbnb, kids game maker Roblox and online retailer Wish are set to go public by the end of the year.