Shares of DoorDash nearly double in price in their trading debut.
Shares of unprofitable food delivery platform DoorDash Inc. surged as much as 92% in their trading debut Wednesday, the latest sign of investor exuberance in what had already been a record year for initial public offerings.
DoorDash, which has seized on the pandemic- fueled boom in demand for meals brought to customers’ doors, saw its shares climb as high as $ 195.50 after raising $ 3.37 billion in its IPO.
The f irst- day jump, the third- biggest this year in the U. S. for a large IPO, gives DoorDash a market capitalization of $ 60 billion and a fully diluted value of $ 71.3 billion — higher than such companies as Kraft Heinz Co., Lululemon Athletica Inc. and Ford Motor Co.
Investors looked past concerns that competition from rivals such as Uber Technologies Inc. may heat up next year as the distribution of vaccines reduces the need for at- home dining. DoorDash’s surge also bodes well for companies such as Airbnb Inc. that are looking to add to the more than $ 160 billion already raised by IPOs in 2020.
DoorDash’s shares opened at $ 182 after the company priced them at $ 102 each. They closed at $ 189.51, up almost 86% from the listing price.
The IPO is the third- largest on a U. S. exchange this year, exceeded only by the $ 4- billion blank- check company backed by billionaire Bill Ackman and software maker Snowflake Inc.’ s $ 3.86- billion offering.
DoorDash had 50% of U. S. market share as of October, surging past UberEats, Grubhub and Postmates, according to its filing documents. That number is up from just 17% in January 2018.
DoorDash said there is an opportunity for that market to expand, with less than 6% of U. S. residents using its service. Revenue in the f irst nine months of the year more than tripled, and its net loss narrowed from a year earlier on a surge in new customers, the company said.
Some don’t expect the increase in at- home dining to last.
“As we go from being stuck at home to wanting to venture out, people are less likely to want to go and order delivery,” said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors. “They’re going to want to actually go out and go to a restaurant.”
The market could also get more competitive, especially as rival Uber sees a pickup in its ride- hailing business, which could help subsidize its food delivery investment, he said.
Although DoorDash helped many restaurants stay af loat as pandemic lockdowns forced them into a takeout- only model, the fees it charges — which can be 30% of the price of an order — are seen as unfair by some eateries. Cities including New York and Seattle have set limits on the fees that delivery services can charge restaurants.
Including DoorDash, companies have now raised more than $ 160 billion in IPOs on U. S. exchanges this year. Several more IPOs are expected before the end of the year as companies that put off listing plans during the early days of the COVID- 19 pandemic regain the confidence to put their shares on public markets.