Shares in DoorDash, a leading food delivery app, skyrocketed on its IPO on the New York Stock Exchange on Wednesday.
The company priced its shares at $ 102 on Tuesday night, above the $ 90 to $ 95 range. The shares started trading at $ 182 per share, giving it a market capitalization of US $ 57.8 billion.
DoorDash, founded in 2013, now joins its competitors GrubHub and Uber at an important time. Food delivery has been a bright spot during the coronavirus pandemic, with people limiting time away from home as much as possible.
DoorDash recorded revenue of $ 1.9 billion in the nine months ended September 30, according to its IPO request. This is more than $ 587 million during the same period last year. As its revenue grew, DoorDash also reduced its net loss to $ 149 million in the same period in 2020. In 2019, DoorDash had a net loss of $ 533 million in the nine-month period.
In its prospectus, DoorDash said more than 390,000 merchants use the app.
The company’s growth was easy. DoorDash has lost money every year since its foundation, citing the cost of developing its platform and expanding into new markets. Last year, for example, it spent $ 410 million to acquire Caviar, a luxury rival.
DoorDash reported a net loss of $ 667 million in 2019 and lost $ 149 million in the first nine months of 2020. The company said it had a profit of $ 23 million in the second quarter of this year, but followed up with a loss of US $ 43 million in the third quarter.
In a government bond filing, DoorDash said it expects to continue spending heavily while trying to expand internationally and add non-food businesses to its platform. DoorDash is also open about the impact of the coronavirus, saying it expects its growth rate to slow in the coming quarters, as the pandemic ends.
Before the pandemic, 63% of restaurant traffic in the U.S. – including visits to fast food stores and food trucks – picked up food to eat elsewhere. In the second and third quarters of this year, that rate jumped to 90% and may remain high even when the pandemic is over, according to Hudson Riehle, senior vice president at National Restaurant Assocation.
DoorDash now controls 50% of the U.S. food delivery market. Its main rival, Uber Eats, has 26%, while GrubHub has 16%. This is a change from 2018, when GrubHub was the market leader with 39% share and DoorDash had 17%.