Shares of DoorDash, a leading food delivery app, surged in its market debut on the New York Stock Exchange on Wednesday.
The company priced its shares at $102 a piece Tuesday night, above its range of $90 to $95. The stock began trading at $182 per share, giving it a market cap of $57.8 billion.
DoorDash, founded in 2013, now joins its competitors GrubHub and Uber at a key time. Food delivery has been a bright spot during the coronavirus pandemic, with people limiting their time outside of the home as much as possible.
After DoorDash’s initial pop, investors are valuing the company, on a revenue basis, at about twice as high as Uber. DoorDash is trading at just over 16 times revenue, if you project the latest quarter out over a full year, while Uber is trading just under 8 times sales.
DoorDash reported $1.9 billion in revenue for the nine months ended Sept. 30, according to its IPO filing. That’s up from $587 million during the same period last year. As its revenue grew, DoorDash also narrowed its net loss to $149 million over the same period in 2020. In 2019, DoorDash had a net loss of $533 million over the nine-month period.
In its prospectus, DoorDash said more than 390,000 merchants use the app.
The company, which ranked No. 12 on the 2020 CNBC Disruptor 50 list, trades under the symbol “DASH.” Goldman Sachs and J.P. Morgan are the lead underwriters for the offering, while SoftBank is the largest shareholder with about 20% stake, followed by Sequoia, which owns 16%.
Wednesday’s public offering kicks off a busy season for market debuts. Airbnb is set to go public Thursday, followed by e-commerce Wish next week and fintech company Affirm and kids’ video game maker Roblox this month.
A delivery person for Doordash rides his bike in the rain during the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., November 13, 2020.
Carlo Allegri | Reuters
DoorDash has attracted scrutiny from the attorney general of the District of Columbia on more than one occasion.
It recently reached a $2.5 million settlement with the AG’s office after facing allegations that it misled consumers on how tips would be allocated to workers. DoorDash has denied the allegations but changed its tip model since the period of time the AG cited in the lawsuit.
More recently, the DC AG’s office confirmed to CNBC it had sent a cease and desist letter to DoorDash on Tuesday, warning it to suspend plans to charge commission on its DashPass service that would exceed a fee cap set by the District.
The DC Council recently passed a law that would cap third-party delivery and pick-up service fees at 15% of the order price during a public health emergency. The Washington City Paper reported last week that restaurants were informed they would begin being charged the original rate in their contracts for DashPass, which is a premium service for frequent users in which restaurants pay to participate.
According to the notice reported by the City Paper, DoorDash told restaurants the legislation “is only applicable to Classic orders and does not apply to the DashPass program.”
In a statement Wednesday, a DoorDash spokesperson told CNBC it had decided not to charge restaurants their contractual rates for DashPass, for the time being, citing “confusion as a result of our response to the unintended consequences of the pricing regulations in Washington, DC.” They maintained DashPass is a “premium marketing offering.”
“We look forward to engaging with local policymakers to increase understanding of the impact pricing regulations have, and solutions that better serve customers, Dashers, and restaurants,” the spokesperson said.
— CNBC’s Lauren Feiner and Ari Levy contributed to this report.
