Key facts:
- Doordash, the leader of food delivery in the US, just completed its IPO
- It doubled its price of $102 per share on its debut and is now trading around $172
- It benefited from the lockdown and made its first profit in the second quarter of 2020.
- In its last round of private financing in June, its valuation was around $16 billion. It now has a valuation of $72 billion.
- Doordash competes notably with Uber Eats (which has just completed the acquisition of PostMates) and Grubhub. It differentiates itself by focusing on suburbs and smaller cities.
- The (non-profitable) startup raises $3 billion in the operation to fuel its growth.
Why it matters – DigitalFoodLab’s opinion:
This IPO is interesting in many aspects. First, it shows the huge appetite of retail investors for startups (as Airbnb also made its public debut the same week) and notably for FoodTech startups. These small investors, already observed on Beyond Meat, are ready to back up startup brands they know well. They drive valuations and expectations to very high, if not unsustainable levels (which are in turn met with contempt by more transitional analysts).
Then, it is also a turning point in the US food delivery market. All major food delivery services are now publicly traded. More than providing quarterly information on their progress, it also makes the competition more even. Now, all companies won’t be able to ask investors for new funds and will have to look for a path to profitable growth. As restaurants are getting more and more vocal about the fees taken by these services, we can’t really expect an increase there. We are then eager to see how they will reinvent their business models.
Finally, but not least, this (very) successful IPO is also a signal for other big food delivery companies worldwide that now is a good time to go public. Zomato, one of India’s delivery unicorns, could be the next line.
