DoorDash, the leading U.S. food delivery app, filed its prospectus with the SEC on Nov. 13. On Nov. 30, through a filing, the company revealed the pricing of its IPO. The pricing was higher than the expectations given DoorDash's last private valuation. The company's improving fundamentals, especially during the COVID-19 pandemic, likely led to a higher valuation.
While DoorDash isn't profitable yet, it's trying hard to get there soon. What's DoorDash’s IPO date and price? Should you buy the IPO? How can you buy DoorDash’s IPO?
When is the DoorDash IPO?
DoorDash, the U.S.-based meal delivery app that was founded in 2013, has seen very fast growth this year due to coronavirus induced lockdowns. Meal ordering has become popular, much to the delight of delivery platforms including Uber Eats, GrubHub, and DoorDash.
DoorDash’s IPO was one of the most anticipated IPOs this year. The company has finally decided to cash in on this explosive growth. DoorDash is the category leader (along with Caviar) with nearly 50 percent of the market share compared to 26 percent for Uber Eats and 16 percent for GrubHub.
DoorDash is one of the most anticipated IPOs this year. The company finally filed its IPO prospectus with the SEC on Nov. 13. DoorDash will get listed on the NYSE under the ticker symbol "DASH." The company will do a roadshow in early December where it will pitch the shares to investors. The stock starts trading on Dec. 9. DoorDash will offer three classes of shares:
- For Class A shares, owners will have one vote per share.
- For Class B shares, owners will have 20 votes per share.
- For Class C shares, owners won't have voting rights.
DoorDash's IPO price
In a new filing on Nov. 30, DoorDash revealed that it plans to raise $2.8 billion in its upcoming IPO. It will offer 33 million shares at a price range of $75–$85 each, which implies a valuation of $32 billion for the company. While its last private valuation was $16 billion in June 2020, The Wall Street Journal reported on Nov. 13 that the company is looking for a valuation topping $25 billion. DoorDash’s updated valuation has caught everyone by surprise.
Should you buy the DoorDash stock IPO?
There are several positives for DoorDash. First, the company has shown very strong growth momentum with its revenues growing to $885 million in 2019 from $291 million in 2018. The company’s improving financials amid the coronavirus pandemic were clear when it reported revenues of $1.9 billion for the first nine months of 2020, which implied impressive growth of 224 percent YoY.
More importantly, DoorDash isn't compromising margins to seek more revenue. Its gross margins were also very strong. In fact, the company had a profitable quarter for the period ending in June before falling back to negative profits in the September quarter.
Also, the stock's risk overhang is gone for now. The California Ballot was supposed to pass a verdict on whether or not gig companies can keep classifying their workers as contractors. Classifying employees would have been very costly for DoorDash and other companies like Uber and Lyft. Right now, the companies can keep classifying workers as contractors with some added benefits.
However, DoorDash’s profitability could decline after the COVID-19 pandemic ends, which the company highlighted in its prospectus. DoorDash continues to invest in its delivery platform technology, which should keep supporting its sales.
How to buy the DoorDash IPO
To buy the DoorDash IPO, which is expected to happen before the end of this year, you will need to have a stock trading account. You can open your account, if you don’t already have one, with one of the many stockbrokers like Robinhood, SoFi Invest, Webull, and Vanguard. After you have deposited enough funds into the account, you can enter a buy order for the stock. Some of the online brokers, including Robinhood, allow you to place advance orders for newly listed stocks.
However, not everyone placing a buy order can get the stock at its IPO price. According to U.S. News & World Report, the underwriters of the IPO offer shares to their “biggest, best, most profitable” clients. U.S. News & World Report also said that if you are determined to get it on an IPO, it helps to have a relationship with a full-service brokerage firm like Fidelity instead of a DIY online brokerage firm.