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DoorDash stock broke expectations in its first day of public trading on Wednesday, climbing more than 84% by noon.
Initially priced at $ 102 on the IPO, the company’s shares started trading at $ 182 before quickly jumping to $ 188.50. This gives the delivery business a market value of almost $ 60 billion.
“It’s a great day. This is an important step, ”said Tony Xu, CEO of DoorDash, ahead of negotiation on Wednesday. “But it’s a day, and I’m a lot more concerned with the long term and how we’re going to continue to strive for excellence… because that’s how we got there today.
The company raised $ 3.37 billion on its IPO after selling 33 million shares. It originally valued its IPO shares at $ 90 to $ 95, but raised the price due to strong investor appetite.
DoorDash said the IPO money will be used to fund its continued expansion.
“Wow is the right word to sum up,” said Mark Shmulik, analyst at brokerage firm AB Bernstein. “It exceeded even the most optimistic expectations we got when doing our own polls.
Shmulik said the rise in inventory was likely a reaction to information about how much money the company is making for each order that DoorDash revealed in the documents it filed ahead of its initial public offering. DoorDash is the first food delivery company to disclose this level of detail, giving analysts and investors a better understanding of whether food delivery can be profitable.
Tom White, analyst at investment banking firm DA Davidson, said he didn’t expect to see such big action on DoorDash’s first day of trading. “It was clear that there would be a demand for listing given that they increased the range,” he said. But “it’s a pretty explosive first day.”
DoorDash has seen massive growth this year after the coronavirus pandemic shut down cities across the country and fueled demand for delivery services. The company’s revenue more than tripled to $ 1.9 billion in the first nine months of 2020 and produced the company’s first profitable quarter in the past two years.
But DoorDash’s growth, although accelerated by the pandemic, was already rising trend. In 2019, the company had revenue of $ 885 million, a 204% increase from $ 291 million the year before. At the same time, his the losses increased from $ 207 million in 2018 to $ 668 million in 2019.
DoorDash has grown into new categories. In April, for example, it announced partnerships with regional US convenience stores to deliver household items like Advil, cereals and ice cream. He also recently partnered with Sam’s Club Pharmacy, which will use DoorDash’s white label software for its own prescription delivery service.
The big gain in DoorDash’s stock price on Wednesday comes with a dark cloud. This implies that DoorDash could have sold its IPO shares at a higher price, which would have raised more money, meaning it left hundreds of millions of dollars on the table.
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