The company is expected to sell 33 million shares.  Source: Doordash
The company is expected to sell 33 million shares.  Source: Doordash

Food delivery startup DoorDash is planning an IPO where the company hopes to raise to $2.8 billion. This will be an IPO valuation of up to $27 billion, making it one of the highest profile IPOs this year. DoorDash, backed by Softbank, is expected to sell 33 million shares, each valued at $85. Investors will be getting a stake at Softbank too. 

The IPO debut is expected to happen in the US. Due to the COVID-19 pandemic, we have seen a surge in home food deliveries. As people stay home and indoor dining closed in most states, food delivery at home has become extremely popular lately. 

As a result, food delivery companies like DoorDash and its competitors UberEats, Postmates Inc, GrubHub, and others have seen a sharp increase in valuations and profits. In 2020, for example, DoorDash confirmed that it had seen a bump in revenue even as many other companies suffered from the economic downturn of COVID-19.

The company will price its shares at $85. Source: Barron’s
The company will price its shares at $85. Source: Barron’s

Additionally, for the first time since its inception, DoorDash was able to report a quarterly profit which is very good news. It’s a clear sign that indeed the COVID pandemic has somehow favored its business and the food delivery industry at large. The IPO listing for the food delivery company is expected to open up a blockbuster year in IPOs. 2020 hasn't been a good year no doubt. The COVID-19 pandemic and the ensuing economic meltdown have put a cloud of economic uncertainty. 

The financial markets have suffered a long period of pressed growth but in recent months, things are looking up. Increased government stimulus, coupled with a reviving economy, has seen a surge in the capital markets. 

It seems like many companies, including DoorDash, want to take advantage of this and as such, we expect that there will be more IPOs before the year is out. Nonetheless, we don’t expect the DoorDash IPO to go live this year.

For now, DoorDash seems to be a $27 billion company. Source: NY Times
For now, DoorDash seems to be a $27 billion company. Source: NY Times

According to regulatory filings fueled by the company, the easiest shares will be floated in February next year. The Silicon Valley-based company is going to debut on the New York Stock Exchange under the ticker symbol DASH. It will be interesting to see how DoorDash will shape up once the COVID-19 lockdowns are over. 

The company has benefited quite a lot this year. Although we have seen the invention of new vaccines, we don't expect to return to normal for at least two years. In essence, there will still be a lot of people ordering takeout moving forward. But as COVID eases, a semblance of normalcy will indeed return. How will this affect DoorDash and its business? 

And how about its stock price? $85 is still a lot of money and any changes in revenues could potentially tank that stock down. But we will cross that bridge when we get there. For now, DoorDash seems to be a $27 billion company and there are a lot of investors that can’t wait to put their money in the company.