By Levi Sumagaysay
DoorDash Inc. is poised to seize a unique moment for its business with a long-awaited initial public offering.
The top app-based food-delivery platform in the U.S., which said in its prospectus that it has raised $2.5 billion from investors including SoftBank’s Vision Fund since being founded in 2013, is now seeking to raise about $3.36 billion in its IPO. DoorDash /zigman2/quotes/222973991/composite DASH +0.99% now commands 50% of U.S. market share, according to Edison Trends, and also operates in Canada and Australia and has plans to expand elsewhere.
The San Francisco, Calif., company competes with Uber Technologies Inc.’s /zigman2/quotes/211348248/composite UBER +4.65% Uber Eats offering and Postmates ( which is being acquired by Uber ) at 33% and GrubHub /zigman2/quotes/210404212/composite GRUB +1.64% at 16%, Edison Trends reported. DoorDash notes in its prospectus that its market share in suburban markets, which traditionally have not developed delivery infrastructures like cities, is actually 58%.
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DoorDash publicly filed for an IPO on Nov. 13 , after announcing that it had started the process with the Securities and Exchange Commission in February, just before the spread of COVID-19 forced shelter-in-place orders that led to a dramatic increase in food delivery.
The company will have about 317.7 million shares outstanding after its IPO, which will give it a valuation of $32.4 billion at the $102-a-share IPO price it announced Dec. 8. That’s well above the most recent price range of $90 to $95 a share it had announced Dec. 4, up from a previously expected range of $75 to $85 a share.
The company intends to trade on the New York Stock Exchange under the ticker “DASH.” The listing will be led by Goldman Sachs and JPMorgan, two of 12 underwriters listed in the filing.
Here are five things to know about DoorDash from its SEC filing .
The app-based platform, which partners with restaurants and depends on on-demand couriers to deliver takeout meals, said it was already seeing an increase in restaurant-food delivery in the past couple of years. The coronavirus pandemic sped that up, and DoorDash saw tremendous growth.
The company’s revenue for the first nine months of the year rose to $1.92 billion, compared with $587 million in the same period last year, according to its prospectus. It had 543 million total orders in the first nine months of 2020, compared with 181 million in the year-ago period.
But like other delivery businesses, DoorDash is losing money. Although it turned a quarterly profit once this year, the company lost $149 million through the first nine months of this year, compared with a $534 million loss in the same period in 2019.
“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,” the company stated.
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In addition, the pandemic poses risks to the company’s business. It has already had a devastating effect on many of the restaurant partners DoorDash needs — the National Restaurant Association said in September that 100,000 restaurants had closed down either temporarily or permanently since March — and could further weigh on the economy.
Among the other possible pandemic risk factors to the company’s business: possible travel restrictions and business closures, capital and financial market impact, regulatory actions and new outbreaks or information related to the virus.
The company, launched by three former Stanford students in Silicon Valley, will remain very much under the founders’ control after its IPO. That’s because DoorDash will have a dual-class stock structure that has largely become the norm for tech companies that have gone public since another company started by Stanford students embraced the structure when it IPO’d in 2004: Google /zigman2/quotes/205453964/composite GOOG +2.90% /zigman2/quotes/202490156/composite GOOGL +3.10% .
Each share of DoorDash’s Class A stock is worth one vote, while each share of Class B stock is worth 20 votes. Company founder and Chief Executive Tony Xu holds the plurality of Class B shares at 41.6%, while co-founders Andy Fang and Stanley Tang hold 39.3% and 39.1%, respectively.
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It is unclear from the first prospectus exactly how much of the company they will own after the IPO. But Xu — who will be able to vote the shares held by Fang and Tang — is set to join the club of ultra powerful founders who are hard to hold accountable, such as Google co-founders Larry Page and Sergey Brin, and Facebook Inc. /zigman2/quotes/205064656/composite FB +2.58% CEO Mark Zuckerberg.