On Friday, food delivery company DoorDash released its public S-1 filing with the Securities and Exchange Commission (SEC); DoorDash plans to go public early next month. It is possible that the COVID-19 pandemic accelerated the initial public offering (IPO), as DoorDash’s revenue increased as restaurants were required to close indoor dining under public health orders. According to the filing, DoorDash has more than 18 million customers, 390,000 merchants, and approximately 1 million delivery workers (Dashers). Additionally, out of all of the food delivery platforms, DoorDash has the largest market share at 48 percent.
From January 1 to September 30, 2020, DoorDash had a net loss of $149 million, for that same nine-month period in 2019, DoorDash had a net loss of $533 million; meanwhile during the same time period in 2020, DoorDash reported $1.9 billion in revenue when a year earlier it reported only $587 million. Furthermore, during the second quarter of 2020, during the heart of the COVID-19 pandemic, DoorDash reported a profit of $23 million out of its $675 million revenue. However, during the third quarter of the year it experienced a net loss of $43 million, despite a revenue of $879 million. Consequently, its valuation rose from $1.4 billion in 2016 to $16 billion in 2020.
DoorDash’s shares will be listed as DASH on the New York Stock Exchange. DoorDash will offer three different classes of stocks with various voting shares: Class A will have one vote per share, Class B will have 20 votes per share and Class C will not have voting rights.
DoorDash listed the COVID-19 pandemic, its history of net losses, and the possibility that it may not continue to grow with these historic rates, as potential risk factors. However, DoorDash also indicated that autonomous vehicle and drone deliveries could meaningfully impact the food delivery industry and that it is starting to work to make that a reality.
While DoorDash’s business may have boomed during the pandemic, it has not always been smooth. DoorDash is also known for its controversial tipping policy, whereby consumers’ tips that they assumed were going to drivers were instead being used to subsidize DoorDash’s guaranteed driver minimum payment; DoorDash has since changed this policy. DoorDash has faced numerous suits for driver misclassification, specifically for classifying its drivers as independent contractors not employees. However, California voters passed Proposition 22, meaning DoorDash and other companies like Uber and Lyft could continue to classify drivers as independent contractors. DoorDash was also sued by a restaurant for falsely advertising a partnership and redirecting users.
DoorDash is not the only one recently filing to go public. On Monday, Airbnb filed with the SEC to go public, however, unlike DoorDash Airbnb was initially negatively impacted by the COVID-19 pandemic as travel came to a halt and forced the company to take cost-saving measures. However, Airbnb noted that within two months, they began to rebound as people sought to stay in home rentals, not hotels, and travel close to home.