How Much Is DoorDash Worth Right Now?
DoorDash is a technology company whose main product is an app-based platform that partners with restaurants and grocery stores, using on-demand couriers to deliver takeout meals and other items. Although the company has seen a steady increase in food delivery in the past couple of years, the COVID-19 pandemic boosted its growth tremendously.
Today, the company connects more than 390,000 merchants, over 18 million consumers, and more than 1 million drivers (“Dashers”) in the United States, Canada and Australia. According to CEO and co-founder Tony Xu, only 10% of restaurant traffic is being delivered today, so there’s still great potential for expansion. The company is also branching out to deliver groceries and more.
Read on to learn more about DoorDash, how much it’s worth and what you should consider before investing in the company.
|DoorDash: Company Snapshot|
|Founders||Tony Xu, Andy Fang, Stanley Tang and Evan Moore|
How Much Is DoorDash Worth?
DoorDash filed for an initial public offering on Nov. 13, 2020. The company announced a $102 per-share trading price on Dec. 8, which would have valued it at $32.4 billion. However, the company closed its first day of trading on Dec. 9 at $189.51, giving it a market capitalization of $72 billion, inclusive of employee-owned shares. DoorDash reported 317.7 million shares outstanding after its IPO.
As of March 16, the company’s share price is $133.66, giving DoorDash a current market capitalization of $42.97 billion.
DoorDash was founded on Jan. 12, 2013, by Tony Xu, Andy Fang, Stanley Tang and Evan Moore. In 2012, the four Stanford students created a website displaying menus from local restaurants in Palo Alto, California. They first named the company Palo Alto Delivery. When the first orders were placed, Xu and his friends made the deliveries, which numbered more than 100. They used to work at night and go to class during the day.
According to a letter included in the company’s Securities and Exchange Commission filing, Xu was lured into the restaurant business “to empower those like my mom who came here with a dream to make it on their own.” Xu moved from China to the U.S. when he was 5 years old. He washed dishes at the restaurant where his mother worked as a waitress. She had a medical license but was not allowed to practice in the U.S.
The 36-year-old made a surprise entry into the billionaires’ club in December 2020 with over $3 billion to his name, owing to a stake of 4.6% of DoorDash.
Key Product Lines Contributing to Revenue
DoorDash makes money by offering on-demand delivery from restaurants, grocery stores and convenience stores to customers in more than 4,000 cities and all 50 states across the U.S.
DoorDash’s revenue for the first nine months of 2020 was $1.92 billion, with 543 million orders. In 2019, the company made $587 million from 181 million orders in the same period. Since its founding, DoorDash has completed more than 900 million orders through its platform.
Current Top Shareholders
Institutional shareholders own up to 18.41% of the company, while mutual fund holders own 6.27%. Individual stakeholders hold the least, at 0.90%.
Here’s a look at the top shareholders:
DoorDash’s Top 10 Shareholders
- Coatue Management LLC, 3.06% of shares
- T. Rowe Price Associates Inc., 2.69% of shares
- Temasek Holdings Pte Ltd., 2.12% of shares
- Darsana Capital Partners LP, 1.63% of shares
- Sands Capital Management LLC, 1.58% of shares
- SCGE Management LP, 1.5% of shares
- Fidelity Management & Research Co., 1.42% of shares
- Morgan Stanley Investment Management, 1.35% of shares
- Durable Capital Partners LP, 1.11% of shares
- Lone Pine Capital LLC, 0.79% of shares
How the Future Looks for DoorDash
When DoorDash went public, analysts said it was “the most ridiculous IPO of 2020.” While some cited lack of profitability, others were concerned about stiff competition in the food delivery sector and a pandemic-induced demand for services that may fade with time. DoorDash lost $667 million in 2019 and $149 million in the first nine months of 2020. In a December 2020 report, Citron Research said, “We don’t see how a food delivery can maintain a valuation of over $50 billion.”
According to an opinion published in Bloomberg, food delivery looks like another gig-economy dead end, and there’s no money in bringing meals to consumers. Still, DoorDash is pushing for expansion.
DoorDash also intends to venture into the delivery of other items with DashMart, a convenience-store concept it recently rolled out in eight cities. Its couriers pick up items including ice cream, cough medicine, dog food and packaged desserts from fulfillment centers run by DoorDash and deliver them to customers who pay a monthly membership fee.
There are also concerns that DoorDash’s policy wars may impact its profitability. According to MarketWatch, the company has spent $48.1 million to help pass Proposition 22 in California. Now, DoorDash and other gig companies are exempted from a state law that would have required them to treat their couriers and drivers as employees. It means these workers are not covered by protections to which employees are entitled, such as sick pay and unemployment insurance.
Is DoorDash Worth Investing In?
In its S-1 form, DoorDash stated, “The circumstances that have accelerated the increase in Total Orders stemming from the effects of the COVID-19 pandemic may not continue in the future, and we expect the growth rate in Total Orders to decline in future periods.” It’s worth noting that the company may continue reporting losses as it has in the past two years.
The food industry is blooming with every second that passes. In this growing industry, DoorDash emerges as a key company leading the change. Despite consistently losing money, the company is keen on growing, something that seems to keep investors hooked.
However, as many experts have cautioned, if restaurants return to normal after the pandemic passes, the business may be affected negatively. Still, there is a possibility that the demand for restaurant food delivery will keep growing, favoring everyone who bets on DoorDash.
While skeptics have suggested that the demand for DoorDash’s brand of delivery service is likely to diminish as time passes, the company continues to aim for expansion by delivering groceries and partnering with even more restaurants for meal delivery. One key factor to watch will be whether the post-pandemic world sees significantly fewer diners seeking the convenient delivery that this business revolves around.
Data is accurate as of March 3, 2021, unless otherwise noted, and is subject to change.
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- MarketWatch. 2020. "DoorDash IPO: 5 things to know about the app-based food-delivery company."
- The New York Times. 2020. "DoorDash Soars in First Day of Trading."
- Forbes. 2020. "DoorDash IPO Delivers Three Billionaires As Wall Street Ignores A Menu Of Losses."
- Citron Research. 2020. "The Most Ridiculous IPO of 2020."
- CNBC Make It. 2020. "DoorDash IPO will make its CEO a billionaire — here’s how his immigrant parents inspired his success."
- Securities and Exchange Commission. 2020. "S-1."