DoorDash IPO: The Last Frontier for e-Commerce?

The DASH Takes Off Even Before Its IPO Debut, Leaping an Astonishing 85%

Everyone from Wall Street to Main Street has an opinion about DoorDash.
Is it the next Facebook, Twitter, or Google? Or is it the next Pets.com?
What is DoorDash really worth, and is it a sign of another Dot.com bubble?

DoorDash is a food delivery app that connects customers with local restaurants. On Wednesday, December 9th, shares of DoorDash began trading on the New York Stock Exchange (NYSE) under the ticker symbol "DASH". The night before, shares were priced at $102 each. By the following morning, the stock was trading at $182 per share. It closed the next day at $188.

Wall Street was enthusiastic about the DoorDash IPO, which kicked off a busy IPO season. This period also featured the debut of Airbnb on December 10th, with Wish expected to go public before the end of the year.

Are You Thinking of Buying DASH?

After gaining more than 85% on its first day of trading, many investors may be tempted to call their advisor and add DASH to their portfolio. But before making any moves, there are a few important considerations.

DoorDash priced its shares at $102 on Tuesday night. The next day it opened at $182 and peaked at $187. So, what changed overnight? The answer: nothing fundamental.

Following its first-day jump, DASH was valued at twice the revenue multiple of Uber.

According to its SEC filings:

• DASH reported $1.9 billion in revenue for the nine months ending September 30th, 2020.

• For the same period in 2019, revenues were $587 million.

But here’s the important context:

• DASH reported a net loss of $533 million for the nine months ending September 30th, 2019.

• It reported a net loss of $149 million for the nine months ending September 30th, 2020.

Investors need to remember that an investment in DASH is an investment in a company that lost $150 million in just nine months.

Should You Buy DASH?

Whether DASH is a good investment is a tough question. Only time will tell.

If you are considering adding DASH to your portfolio, make sure you fully understand the business model and the company’s financials. And if you need help deciding, the financial professionals at NEST Financial can walk you through the numbers and help determine if it’s the right fit for your investment strategy.