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DoorDash IPO Stuns

The U.S. food delivery service made quite a market debut.

Securities In This Article
DoorDash Inc Ordinary Shares - Class A
(DASH)

Wednesday belonged to DoorDash DASH.

The U.S. food delivery service’s stock skyrocketed in its market debut, closing at $189.51 – well ahead of the $102 initial public offering (IPO) price the company had set on Tuesday night.

Clearly, investors continue to pay top dollar for leading tech IPOs – even for companies like DoorDash that aren’t yet profitable.

“In our view, DoorDash’s successful IPO validates venture backing of early-stage mobility startups,” says Asad Hussain, lead mobility analyst at PitchBook, a Morningstar company. “We expect VC funding toward mobility to increase as investors deploy capital towards sectors with pandemic-induced tailwinds. Novel technologies such as delivery platforms, autonomous/electric vehicles, and micromobility have made it clear that startups will play a key role in shepherding in the future of transportation.”

Hussain also notes that there’s plenty to like about DoorDash.

“DoorDash is growing at a blistering pace of 200%-plus, well ahead of its competitors thanks to its focus on higher-ticket, fast-growing suburban markets, and knocking on the door of sustained profitability with a 10% adjusted EBITDA margin delivered in the third quarter,” he explains. “We believe there is a long runway of growth ahead for DoorDash and expect consumers to continue to favor food delivery even beyond the pandemic.”

However, given the stock’s remarkable one-day run-up, this story might be best watched from the sidelines for now.

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Susan Dziubinski

Investment Specialist
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Susan Dziubinski is an investment specialist with more than 30 years of experience at Morningstar covering stocks, funds, and portfolios. She previously managed the company's newsletter and books businesses and led the team that created content for Morningstar's Investing Classroom. She has also edited Morningstar FundInvestor and managed the launch of the Morningstar Rating for stocks. Since 2013, Dziubinski has been delivering Morningstar's long-term perspective and research to investors on Morningstar.com.

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