DoorDash files for IPO
The San-Francisco based company, DoorDash, the largest food delivery start-up in the United States, will list its shares on the New York Stock Exchange. Founded in 2013, DoorDash is one of the main technology-driven delivery players with more than 18 million customers and 1 million “dashers” who deliver the food from its merchants. Its mission is to enable brick-and-mortar businesses to thrive “in an increasingly convenience-driven economy with rapidly evolving consumer expectations,” according to its Form S-1 Registration Statement.
CEO of DoorDash, Tony Xu, said that he founded the company in pursuit of helping small restaurants and local community workers to “fight the underdog” and succeed even in troubling and changing times like today. “While small businesses are vital to our communities and created approximately two-thirds of net new jobs in the United States from 2000 to 2018, they now risk being left behind in the convenience economy where consumers have become accustomed to obtaining everything in a few clicks, a trend that has only accelerated in a COVID world,” Xu said in a letter attached to the IPO prospectus.
Xu and co-founders Stanley Tang and Andrew Fang will all own a portion of shares that wield 20 votes each, whereas common stockholders will only hold one vote per share. Xu will own 41.6% of Class B common stock, with 14.9 million shares, before the offering. Andy Fang and Stanley Tang will also control a large amount of stock. Fang will own nearly 40% shares in Class B common stock, with 13.5 million shares, and Tang will own 39% of the Class B stock, with 13.4 million shares.
DoorDash’s operational playbook will hinge on its logistics platform that can facilitate the local deliveries, merchant services to grow sales in the modern era through customer acquisition, insights and analytics, payment processing and customer support, as well as its membership program, DashPass. DashPass is a membership program where customers can fork out a flat monthly delivery fee at around $9.99 for unlimited deliveries primarily from restaurants.
As the leading food delivery service in the United States, DoorDash’s revenue more than tripled in September from a year earlier. Robust revenue earnings year-over-year show the company’s growth, with a net income of $23 million for the first three months of the pandemic by the end of June, although its increasing expenses have curtailed the company’s profitability. In addition to incurring a net loss in each year since its founding, it reported a net loss of $667 million in 2019 and $149 million within the first nine months of 2020.
The company’s announcement to make an IPO comes after a big win for the gig economy and delivery companies in California, where voters passed Prop 22, exempting delivery providers from having to reclassify their drivers as employees. This law would have made hiring drivers more expensive with added costs like health care and sick days, further affecting cash flows and DoorDash’s profitability.