DoorDash raises $3.37 bn in IPO

SAN FRANCISCO: DoorDash Inc. is making its trading debut Wednesday after raising $3.37 billion in an initial public offering with Airbnb Inc.’s IPO set to follow within hours.

San Francisco-based DoorDash sold 33 million shares Tuesday for $102 each after marketing them for $90 to $95 each. The company has a fully diluted value of about $38 billion, which includes employee stock options and restricted stock units as detailed in its filings.

DoorDash’s IPO is the thirdlargest US listing 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 including so-called greenshoe shares.

The biggest US food-delivery company is part of a cadre of consumer-facing, web-based businesses that have successfully navigated the coronavirus pandemic and are expected to go public this month. DoorDash stepped in as a sort of lifeline for many restaurants as pandemic lockdowns forced them into a takeout-only model. But the fees

DoorDash charges restaurants, which can be 30% of the cost of an order, are seen as unfair by some eateries, especially smaller or newer establishments. Some cities, including New York and Seattle, have set limits on the amount of fees delivery services can charge restaurants.

Before the pandemic, food-delivery companies like DoorDash and rivals Uber Eats and Grubhub Inc. struggled to make money amid fierce competition among themselves and blowback over their fees and treatment of workers. Margins in the business are razor thin, prompting a wave of consolidation last summer that saw Grubhub get bought by Just Eat Takeaway.com NV for $7.3 billion.

But DoorDash has pulled even further ahead of its rivals by pursuing a strategy in the suburbs and expanding rapidly through American cities. The pandemic sped things up. Revenue in the first 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 in its filings.

The next-largest of the group is home-rental platform Airbnb, which is seeking to raise as much as $3.09 billion in its IPO.