![]() ![]() On that basis, a 50% premium to the anticipated price still looks cheap.īetween a broad market that is at record highs and the huge demand for stocks, buyers at the offering price will likely be able to sell for a profit should they choose to do so. They have seen sales grow 268% in the third quarter from the previous year, following on 214% growth in Q2. As you might expect, DoorDash has been a huge beneficiary of the covid environment where restaurants have seen closures or restrictions to indoor dining, and have been forced to switch to a takeout and delivery model as a result. In a lot of ways, the numbers justify that price. That was $75-$85 a share, so the eventual offering price is around fifty percent higher than the low end of that range. This is higher than the expected $90 to $95 range, but the real comparison is to the price range that the company originally targeted when the IPO process began. That demand seems to have hit hit new heights this morning as word comes that food delivery service DoorDash ( DASH), which will start trading today, sold shares in its debut at $102. The fully justified assumption is that all of that chaos and pain is temporary, and as a result, there is unbelievable demand from institutional investors for stock debuts. That has occurred even as a pandemic ravaged the world, and particularly the U.S., and as unemployment hit record highs and the economy collapsed. So far this year, IPOs have raised over $140 billion, breaking the previous record, set in the midst of the dotcom boom in 1999. Future earnings beats may already be priced into shares.From a market perspective, one of the most remarkable things about this remarkable year has been the demand for new stock offerings. Gordon Haskett analysts point out that the restart of student loan repayments in September 2023 will be a true test of the elasticity of the model when nearly 27 million consumers have to adjust their discretionary budgets to afford loan repayments. On June 14, 2023, Gordon Haskett downgraded shares of DASH to a Hold from Buy and a $72 price target, down from $73. Surprisingly, the uncertain economic backdrop hasn't hurt DoorDash's growth as it continues to drive higher revenues. Adding in the premium pricing, delivery fees and tips, DoorDash food delivery can cost up to 50% more than ordering in the restaurant. Gordon Haskett's research has revealed that restaurant menu prices tend to be higher when ordered through the DoorDash app. Gross order volume (GOV) grew 29% YoY to $15.9 billion, beating prior guidance of $15.1 to $15.5 billion. Its Adjusted EBITDA rose 278% YoY to $204 million versus $120 to $170 million consensus analyst estimates. The company lost ($0.48) per share in its Q1 2023 earnings report but grew revenues 39.8% YoY. campaign to justify its payout policies for its drivers and goes out of its way to promote merchant and customer satisfaction polls. Despite growing to be the largest food delivery app in the U.S., it has yet to turn a profit. One would assume that such an asset-light business should be wildly profitable. Profit-LessĭoorDash is a middleman that facilitates transactions and takes a cut of the transaction. DoorDash doesn’t pay a salary or minimum wage, nor pay for the maintenance and expenses for delivery drivers. It’s a very simple asset-light business plan. Meanwhile, DoorDash has built up its network of restaurants and bulked up its supply of independent drivers. ![]() Customers order food from the establishments, and drivers deliver the food to the customers. DoorDash operates a delivery platform that connects customers with restaurants and "independent" drivers. ![]()
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