DoorDash Shares Explode in Market Debut

American delivery food service company DoorDash saw its shares skyrocket when the stock started trading on the NYSE this Wednesday under the ticker symbol DASH.

The stock opened at $182 a share and closed at $189.51. The company had priced its IPO at $102 a share the night before.

DoorDash has been one of the biggest winners of the coronavirus pandemic as many restaurants had to close their dining rooms and move to delivery.

With the stock’s close on Wednesday of an 85% jump compared to $102, DoorDash has a market valuation of roughly $60.2 billion.

Founded in 2013, DoorDash competes with GrubHub and Uber and delivers food to people.
The company 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.

DoorDash said in its prospectus that it had more than 390,000 merchants use the app. The company has ranked No. 12 on the 2020 CNBC Disruptor 50 list.

As well as DoorDash did in its debut, David Trainer, CEO of market research firm New Constructs, calls it “the most ridiculous IPO of 2020.”

“They do not have a way to make money long-term,” Trainer said on Yahoo Finance Live just after DoorDash began trading. “There’s a lot of competition. And we’re seeing their market share decline. At the end of the day, this business is a race to a zero-margin business, because there’s really no differentiation… This is Silicon Valley selling public markets an asset at a huge premium, and they’re going to laugh all the way to the bank, and I think a lot of individual investors rushing into this are going to lose a lot of money.”
Is it a coincidence,” Trainer wrote in a note, “that DoorDash filed for its IPO so soon after COVID-19 vaccines were announced? We think DoorDash’s current investors and bankers recognize that the window of opportunity to IPO this terrible business closes quickly when the threat of COVID-driven lockdowns no longer drives growth in food delivery demand.”

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.