DoorDash filed a new S-1 document on Monday, November 30. In this new document, the company updated the market on its potential IPO price range along with how many shares it intends to sell through its initial public offering. It was very exciting coming back into the office after the U.S. Thanksgiving holiday and reading that DoorDash had filed an amendment to its S-1 with more details on its expected IPO. There is also news of an expected IPO date for DoorDash. That tentative date is Wednesday, December 9.
If you’ve been following my weekly Wealth Daily articles, then you know that I’ve spent the past few weeks discussing Airbnb’s and DoorDash’s potential December IPOs. Well, December is here, and we’ve received news that both companies could go public as early as mid-month. The vacation rental company Airbnb plans to begin its investor roadshow this week to prepare for its IPO. Airbnb is aiming for a $30 billion–$33 billion valuation. This is higher than its expected $30 billion from just a few weeks ago. The increase in its expected valuation is a major selling point for potential investors. This is the time for the company to market itself and increase demand for its shares ahead of its market debut.
As I mentioned earlier, the food-delivery giant DoorDash filed a new S-1 document yesterday, which gives a little more clarity about what to expect from its IPO. The price range is $75–$85 per share. It plans to sell 33 million shares, which means the company would raise between $2.475 billion and $2.805 billion during its IPO, depending on what the company decides on for its IPO price. This would put the company’s valuation at about $32 billion. Its last private valuation was about $16 billion back in June.
Market activity has been stronger recently. Last week, the Dow Jones hit a record-setting 30,000 after there was more clarity on the U.S. election. Positive market activity is only going to fuel both of these companies and their upcoming IPOs. On top of that, the IPO market has been having a strong year. According to Dealogic, over $140 billion has been raised through 383 IPOs in 2020. This figure beats the full-year record high set back in 1999. Despite the coronavirus pandemic, the IPO market has pulled through and had a rewarding year.
DoorDash IPO Details
The company will list its shares on the NYSE under the symbol “DASH.” The IPO will be led by Goldman Sachs and JPMorgan — just two of the 12 underwriters involved.
DoorDash states in its prospectus that it has been able to raise its revenue for the first nine months of 2020 to $1.92 billion compared to $587 million in the same period of the previous year. Its prospectus also indicates that the company was able to complete 543 million total orders in the first nine months of 2020 compared to 181 million in the same period of 2019. With that being said, the company is, unfortunately, losing money just like most delivery companies. DoorDash lost $149 million in the first nine months of this year. That’s compared to a $534 million loss in the same period in 2019. It is worth noting that loss shrunk when comparing the first nine months of 2019 to 2020. DoorDash’s prospectus notes:
Although we generated net income of $23 million for the three months ended June 30, 2020, we have incurred net losses in each year since our founding, we anticipate increasing expenses in the future, and we may not be able to maintain or increase profitability in the future.
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The company is proud that it started back in 2013 to help empower local businesses. It relies on partnerships with restaurants and both local and nationwide brands. And while the pandemic has played a significant role in increasing DoorDash’s business, a lot of restaurants are still struggling, which puts some of DoorDash’s partnerships in jeopardy.
The National Restaurant Association said in September that 100,000 restaurants have closed either temporarily or permanently since March. Some other risk factors for DoorDash include travel restrictions, business closures, capital and financial market impact, and regulatory actions. DoorDash would experience a loss in revenue if people are unable to financially support themselves. Ordering food from a food-delivery company like DoorDash is a luxury and can be an expensive one at that.
DoorDash will follow the dual-class stock structure for its IPO. This structure is fairly common when it comes to technology IPOs. This gives DoorDash’s founders most of the control in the company. DoorDash’s Class A stock is worth one vote and its Class B stock is worth 20 votes. The company’s founder and CEO, Tony Xu, will hold the majority (41.6%) of the Class B shares, while co-founders Andy Fang and Stanley Tang will hold 39.3% and 39.1% of Class B shares.
DoorDash has become a core leader in its market and that easily appeals to investors. Not to mention, it has grown throughout the pandemic. However, it’s unclear how the company will maintain that growth post-pandemic without incurring more losses. That doesn’t mean we won’t see investor demand for this IPO — it’s a highly anticipated IPO from a well-known brand.
If you’re interested in learning more about IPOs, IPO news, and upcoming IPOs like those expected from Airbnb and DoorDash this month, click here.
Until next time, Monica Savaglia Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.
