Investors gobbled up DoorDash shares on their first day of trading Wednesday, reflecting enthusiasm for the company’s food-delivery model as the coronavirus pandemic changes dining habits.
The stock opened at $182 on the New York Stock Exchange — a 78.2% pop from the IPO price of $102 — before falling to $173.78. At the opening price, the market valued DoorDash at $69 billion — more than Chipotle Mexican Grill, Domino’s Pizza, and Dunkin’ Brands Group combined.
In the week before Tuesday’s initial public offering, DoorDash had raised its proposed price range 16% to $92.5 per share at the midpoint before pricing even higher. The IPO, which raised $3.4 billion, was the largest of the year.
“Wall Street loves a pandemic winner,” The New York Times said, noting that the virus “has been a boon to the company, as people turned to delivery services while stuck in their homes.”
DoorDash, the nation’s largest food-delivery service, has yet to turn an annual profit but revenue in the third quarter surged 268% to $879 million, and total orders more than tripled in the latest period to 236 million.
“DoorDash is the first IPO in a late-year consumer technology wave” as companies take advantage of “a post-election stock rally and a clear indication of investor demand for high-growth tech,” CNN Business said.
The company has admitted it faces some uncertainty about what its post-COVID-19 business will look like, especially with a widespread vaccine rollout expected by mid-2021. “The circumstances that have accelerated the growth of our business stemming from the effects of the COVID-19 pandemic may not continue in the future,” it said in its IPO prospectus.
But DoorDash CEO Tony Xu believes demand will remain healthy after the pandemic.
“Once people get used to a habit, they tend to stick with it. We saw this with e-commerce, we saw this with booking travel over the internet,” he told The Wall Street Journal in an interview ahead of the IPO.
DoorDash is also planning to expand beyond food delivery, saying its network positions it to “fulfill our vision of empowering all local businesses to compete in the convenience economy.”