DoorDash is reportedly seeing its estimated valuation rise to some $28 billion as the food delivery platform moves ahead with its long-awaited initial public offering (IPO). The company noted in a recent filing that it’s currently capturing just a tiny piece of the total U.S. market for food delivery.
“Our [gross order volume] in 2019 represented less than 3 percent of this off-premise spend, highlighting the large addressable opportunity ahead of us in the food vertical alone,” DoorDash wrote in its recent S-1 filing. “We are also beginning to expand into other verticals beyond food and our ambition is to empower all types of local businesses.”
That’s good news for DoorDash’s upcoming IPO. The Wall Street Journal quoted unnamed sources Monday (Nov. 30) as saying that the IPO is seeing good demand in road shows, boosting DoorDash’s likely valuation to a range of $25 billion to $28 billion from the $25 billion initially anticipated.
The company noted in its S-1 that while COVID-19 has slammed many industries, the pandemic has actually been a big positive to its business as consumers choose takeout over in-restaurant dining.
DoorDash wrote in its S-1 that “58 percent of all adults and 70 percent of millennials say that they are more likely to have restaurant food delivered than they were two years ago, and we believe the COVID-19 pandemic has further accelerated these trends.”
The company said that helped it boost revenues to $1.9 billion during 2020’s first nine months — more than double the $885 million recorded in the same 2019 period. DoorDash added that it swung to a $994 million gross profit during the year’s first nine months vs. a $149 million net loss for the same 2019 period.
However, the company said it expects to continue growing over the long term even after the pandemic ends. “We believe the improving value proposition of local logistics platforms, including DoorDash … has contributed to increasing off-premise consumption, and we expect this trend to accelerate, particularly in today’s convenience economy,” the firm wrote.
DoorDash also noted that “while we are the category leader, U.S. consumers on our platform in September 2020 represented less than 6 percent of the U.S. population. … We believe we are in the early phases of broad market adoption.”
However, the company conceded that it faces stiff competition from not only rival food delivery platforms like Uber Eats, Grubhub and Postmates, but also from Domino’s and other delivery-friendly pizza chains. The firm added that other competition includes grocers that have their own delivery systems in place, as well as restaurants that offer tradition takeout and delivery.
“Changing traditional ordering habits is difficult, and if merchants and consumers do not embrace the transition to local food-delivery logistics as we expect, our business, financial condition and results of operations could be adversely affected,” DoorDash wrote.
But the company added that in addition to its flagship delivery service, it’s also expanding into new businesses like DoorDash for Work, which provides restaurants with large catering orders from businesses.
The company wrote in its filing that it has also developed DoorDash Drive, a white-label logistics service for restaurants that chains like Chipotle and Little Caesars have already signed on to. The firm wrote in its filing that DoorDash drive “allows merchants that generate demand through their own websites, apps and other channels to fulfill orders using our platform.”
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