DoorDash IPO sees stock skyrocket on the first day of trading
The food distribution firm, DoorDash, is ringing the opening bell on Wall Street with a share price leap of 85%.
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When it listed on Wall Street, DoorDash saw its share price skyrocket by over 85 percent on the New York Stock Exchange. The company’s stock began trading at $182 apiece, far higher than the initial public offering price of $102 that it set. DoorDash shares were valued at $189 at market close. These results significantly surpassed the expectations of the company when it set its share price target range between $75 and $85 last month.
DoorDash was privately valued at about $16 billion earlier this year. As a publicly held company today, according to CNBC, its value is about $60 billion. While DoorDash is not yet lucrative, investors believe its massive production shows potential. The company declared revenue growth, reductions in losses, and a rising number of customers, vendors, and delivery staff in filings with the US Securities and Exchange Commission last month.
For DoorDash, the last few months have been thriving, as the coronavirus has forced people worldwide to stay indoors. Founded in 2013, the San Francisco-based company has attracted millions of clients who avoided going out to eat and now order their meals via the platform. DoorDash has grown from only restaurant delivery to supermarket, pet shop, and convenience store deliveries, reaping the benefits of this timing.
The company says it currently has over 18 million customers, partners with over 390,000 vendors, and has over 1 million delivery staff. However, DoorDash’s company isn’t without any risk of harm. The firm said in its federal filing that it faces stiff competition from businesses like Uber and Grubhub. DoorDash also said that if its delivery staff — or Dashers, as the firm calls them — are officially classified as employees, its activities could be affected. That would suggest that payroll and insurance expenses, as well as any allegations of prejudice or employment compensation claims that might occur, would be payable.
DoorDash stated in the filing that an even worse risk factor for the company is its ability to cost-effectively attract and retain Dashers. The company added that “negative perception of our platform or company may harm our reputation, brand, and local network effects.” The company settled a $2.5 million lawsuit last month with the Washington DC attorney general over potentially misleading business practices, which claimed the company withheld tips from the delivery staff.