DoorDash shares rocket amid IPO fever

[SAN FRANCISCO] Food delivery startup DoorDash surged in a US stock market debut as investors gobbled up shares, kicking off a "unicorn parade" set to include Airbnb on Thursday.

DoorDash shares priced at US$102 for an initial public offering on Wednesday jumped more than 80 per cent out of the gate, ending the formal trading day at US$189.51.

The San Francisco-based firm raised US$3.4 billion in a market hungry for emerging tech sector firms catering to pandemic lifestyle shifts to give the fast-growing firm a valuation of US$39 billion at the opening.

"In this Covid backdrop, food delivery is a main artery to get meals for many consumers and that trend looks to accelerate with a second wave," said Wedbush analyst Dan Ives.

"This IPO and strong Street reaction speaks to investor appetite for these new growth stories."

The debut gave DoorDash a value more than double the US$16 billion it was deemed worth during a private funding round in June.

Delivery of meals and groceries has boomed during the pandemic, with restaurants offering no or limited dine-in options and people fearful of exposure to Covid-19.

DoorDash, which competes with GrubHub and Uber Eats, operates a leading online platform connecting people ordering food with those willing to deliver it.

DoorDash is on track to take in some US$2 billion in revenue this year on growing demand during the pandemic, the food delivery startup said in a prior filing.

The startup reported losses totaling US$149 million in the first nine months of 2020.

The startup boasts having more than a million delivery people, referred to as "Dashers," and more than 18 million customers.

DoorDash has said surveys showed that as of October it had a 50 per cent share of the US meal delivery market, and was twice as large as its nearest competitor, Uber Eats.

DoorDash followed in the footsteps of other tech startups regarding company governance, offering an assortment of share types that will result in co-founder Tony Xu maintaining control.

AFP