The Strategist

Papers of US largest food delivery service jump by 80% during IPO

12/10/2020 - 02:52

DoorDash, the largest food delivery service in the United States, made a successful debut on the stock exchange. At the start of trading, the company’s papers jumped by almost 80%.

Cory Denton
Cory Denton
The shares of the DoorDash food delivery service have risen by almost 80% since the start of trading on the New York Stock Exchange compared to the IPO price. During the initial public offering, the company sold its securities for $102 each, as reported by CNBC, while at the Wednesday opening the securities were worth $182. At this price, the company's capitalization is $57.8 billion, the channel said. 

DoorDash is the largest food delivery service in the USA. Prior to the IPO, private investors estimated it at $16 billion. According to Crunchbase, the startup collected more than $2.5 billion from investors for 11 rounds. 

DoorDash took advantage of the coronavirus pandemic-induced jump in demand for food delivery and investor optimism about the IPO, writes Bloomberg. The company's revenue more than tripled in the first nine months of this year and its net loss decreased compared to last year. The DoorDash placement was among the top 3 largest IPOs in the US this year.

Thanks to the DoorDash IPO, three new dollar billionaires have appeared in the world, says the American Forbes. These are the 36-year-old CEO Tony Xu whose share now exceeds $3 billion, as well as two co-founders of DoorDash: 28-year-old Andy Fang and 27-year-old Stanley Tang. The latter owns packages worth more than $2 billion. Xu called what is happening with the company something "unrealistic" in a conversation with the Financial Times. "However, for me, the main thing has always been the pursuit of customers and perfection, not the pursuit of numbers," he said. 

At the same time DoorDash was criticised by some restaurant groups who called the company's fees too high, FT stresses. Investors, in turn, are wondering whether DoorDash and its competitors can be profitable in the long term. "As we move from sitting at home to going out, people are less likely to want to order," Max Gokhman, asset manager at Pacific Life Fund Advisors, told Bloomberg.