Food delivery company DoorDash (DASH) spiked about 78% above its IPO price, opening at $182 a share on Wednesday. The company’s IPO was priced at $102 a share on Tuesday. The jump is the third largest this year, giving the company a fully diluted valuation of about $68 billion.
It was a nail-biting IPO as indications, which started around 10 a.m. ET, pushed the stock price higher and higher until opening shortly before 1 p.m. ET. In the early minutes of trading shares surged as high as $186 before coming back down to hover around its opening price.
The company sold 33 million shares, raising $3.37 billion as it took advantage of a record year for public market debuts.
Stay-at-home orders during the pandemic have been a tailwind for the Silicon Valley start-up as demand for food delivery spiked.
The company reported $1.9 billion in revenue and a loss of $149 million in the 9 months ending September 30. DoorDash boasts more than 1 million delivery workers (“Dashers”) and 18 million customers.
The company had received some bullish calls ahead of its IPO, as well as a scathing criticism from research firm New Constructs.
“This IPO reminds us of WeWork’s attempted IPO, which we called ‘The Most Ridiculous IPO of 2019,’ because DoorDash’s business is similarly disadvantaged,” wrote David Trainer, CEO of New Constructs, in a note to investors.
He went on to say “to justify a $25 billion valuation, the company needs to grow its share of global food delivery app market to 56% from ~16% over the trailing twelve months (TTM) while also raising margins from -12% to 8% in an intensely competitive business.”
The food delivery service was initiated with an Outperform rating and a price target of $100 at Fox Advisors.
DA Davidson rated the stock a Buy with a price target of $93 ahead of the IPO. However today’s opening trade price blew past suchbullish calls.
The food delivery platform faces stiff competition amid a market which has been consolidating, as highlighted in its S-1 filing.
“In the United States, we compete with other local food delivery logistics companies, such as Uber Eats (UBER), Grubhub (GRUB), and Postmates,” and chain merchants that have their own online ordering platforms.
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre
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