Christmas came early this year for DoorDash. The seven-year-old food delivery service went public on Wednesday with astonishing results. In the first day of trading, the company raised $3.4 billion, exceeding expectations, reports Investor’s Business Daily. When DoorDash originally filed with the Securities and Exchange Commission, the company expected to sell 33 million shares for a price between $75 and $85 per share. Analysts estimated a sales price of $90 to $95 per share. Late Tuesday, DoorDash priced shares at $102 each. As of 5:20 p.m. EST yesterday, DoorDash shares were valued at $186.00.
Tony Xu, CEO, said, “I recognize the significance of the milestone and the moment, but it is one day on this multidecade journey.”
Food delivery service during pandemic
With an estimated 18 million customers, including subscribers to the DoorDash DashPass subscription program, the food delivery service has played an important role in the wake of the pandemic. In addition to helping restaurants stay alive, DoorDash has helped keep drivers employed and individuals and families fed in a year like no other. The food delivery service is available in 50 U.S. states, and in more than 4,000 cities in the U.S., Canada and Australia. The partner with more than 300,000 restaurants around the world.
During the first nine months of 2020, DoorDash had $1.9 billion in revenue, more than double last year’s revenue of $587 million for the same period last year. DoorDash earns its money from a revenue share agreement with restaurants, service and delivery fees, and subscription revenue from DashPass.
DoorDash’s economic impact
In October, DoorDash released an economic impact report sharing specifics. Here are highlights from that report.
- In 2019, the DoorDash platform accounted for $13.2 billion in restaurant and Dasher income.
- Every $1 spent on food on the platform stimulated an additional $2.37 in overall spending in the economy.
- 67% of restaurants said DoorDash has been critical to their survival during COVID-19.
- 76% of Dashers (drivers) said that DoorDash has had a positive impact on their ability to take care of their own families.
- 88% of consumers believe DoorDash has helped restaurants during the pandemic.
- 65% of restaurants said they increased profits during COVID-19 because of DoorDash.
- 73% of restaurant owners believe that third-party delivery platforms are good for the industry.
- 57% of restaurants said their businesses would have closed during the pandemic without DoorDash.
- 90% of Dashers said they believe DoorDash has provided an important service during the pandemic.
“We’re incredibly proud of our economic impact and grateful to further our mission to empower local economies by connecting consumers with the restaurants they love, supporting our merchant partners, and creating flexible work opportunities for Dashers. Particularly as our country continues to grapple with the COVID-19 crisis, we are honored to be a platform that has helped generate billions of dollars in Dasher earnings and new revenue for restaurants at such an important time,” said DoorDash on its blog.
$200 million pledge to communities
Last month, DoorDash announced a five-year, $200 million commitment to support local communities through its Main Street Strong Pledge. The money will be used to support Dashers in meeting their professional goals, empower local merchants and support diverse equality of access in local economies, and support and strengthen the communities where DoorDash operates.
“We pledge to deploy these resources to make meaningful change in the communities we serve. We are excited to experiment with creative solutions for merchants and Dashers alike, acknowledging that some of those experiments will be less successful than others and that there will be important learnings from those misses. We are eager to share those lessons and continue tackling the work before us,” said DoorDash in a November 12 blog post.
There is no other way to describe this, but to say “wow!” This is an incredible start in what has been an otherwise insane year. Based on the important service DoorDash provides to merchants, drivers and communities, their successful IPO is not a surprise, but no one could have guessed the magnitude of investors’ support. It will be interesting to watch DoorDash’s stock value in the coming weeks to see if the share price remains strong.