New Constructs CEO David Trainer and EquityZen co-founder Phil Haslett share their analysis ahead of DoorDash and Airbnb going public.
DoorDash stock skyrocketed in its NYSE debut Wednesday, but New Constructs CEO and market analyst David Trainer told FOX Business Network’s “The Claman Countdown” investors shouldn’t waste their money.
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“DoorDash is the WeWork of 2020,” he said. “This business is unlikely to ever make money consistently. The current valuation implies they’re going to have something like over 120% of the food delivery at total addressable market.
“This is just a way, honestly, for Softbank to try to recoup some of the losses from WeWork,” he added. “And we would highly recommend that investors avoid this IPO. It’s a ripoff for retail investors.”
DOORDASH IPO DELIVERS BIG, SHARES SOAR 86%
The food-delivery app opened Wednesday at $182 per share and quickly surged more than 80% upon initial offering.
In this photo provided by the New York Stock Exchange, Fred Demarco, left, works with a fellow trader on the floor of the NYSE during the DoorDash IPO, Wednesday, Dec. 9, 2020. (Courtney Crow/New York Stock Exchange via AP)
Trainer, a specialist in Wall Street research, pointed out that if DoorDash hasn’t been all that profitable in the current market, then its post-pandemic performance is questionable. He said other delivery companies, like GrubHub, came to market with positive margins but turned negative as competitors rose up to challenge them.
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Another issue with DoorDash’s IPO, Trainer explained, is the lack of “barriers to entry,” specifically indicating there are zero prerequisites to work in food delivery.
“If I’m a restaurant owner, do I really want to give up my relationship with my buyer, my end consumer, to somebody I don’t know?” he asked. “And if, let’s say for some crazy reason, all of a sudden food delivery makes a ton of money … what prevents restaurants from saying, ‘Well, we’re going to take that back?’
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“It’s a business that has no moat, no competitive advantages, and I don’t think will ever make money.”
