US Food Delivery Company DoorDash IPO Hits Jackpot... Valued at $39 Billion

IPO Price Set at $102, Listing on the 9th
Company Valued at $39 Billion
IPO Price Raised Sequentially Through Roadshows
SoftBank, Sequoia Among Major Beneficiaries

[Asia Economy Reporter Naju-seok] DoorDash, a U.S. food delivery company scheduled to be listed on the New York Stock Exchange, has raised its IPO price once again. DoorDash is expected to be recognized with a higher corporate value than initially predicted, thanks to lifestyle changes caused by the COVID-19 pandemic and the enthusiasm for IPOs.

According to foreign media including The Wall Street Journal (WSJ) on the 8th (local time), DoorDash set its IPO price at $102 (approximately 110,000 KRW). This is an upward adjustment from the initial target price range of $90 to $95. Accordingly, if DoorDash reflects the IPO price at its listing scheduled for the 9th, its corporate value is expected to reach $39 billion. DoorDash plans to raise $3.36 billion through this IPO. Initially, DoorDash aimed to raise $2.81 billion through the IPO, but the increase in the IPO price has also increased the amount of funds raised.

[Image source=Reuters Yonhap News]

Investor interest in DoorDash was already confirmed during the roadshow held on the 30th of last month. At that time, DoorDash predicted an IPO price range of $75 to $85. Investors highly valued the company’s corporate value due to the rapid changes in dining culture caused by the COVID-19 pandemic, its rapid expansion within regions, and its profitability. DoorDash recorded $675 million in sales and $23 million in net profit in the second quarter of this year.

Foreign media emphasized that DoorDash became the largest independent food delivery company in the U.S. through this listing. According to Edison Trend Data, as of October, DoorDash accounted for 50% of delivery orders in the U.S., establishing itself as a leader in the delivery industry.

In addition to the company’s intrinsic value, the strong enthusiasm for IPOs in the U.S. significantly contributed to DoorDash’s ability to set a high IPO price. In 2018, the market valued DoorDash at $1.4 billion. Considering it was $15 billion earlier this year, the corporate value has greatly increased through the COVID-19 pandemic.

DoorDash has received investments from SoftBank’s Vision Fund and Sequoia Capital. Through this IPO, the value of SoftBank’s and Sequoia’s holdings rose to $6.4 billion and $5.3 billion, respectively. Tony Su, DoorDash’s CEO, also joined the ranks of billionaires as the value of his holdings soared to $1.5 billion through this IPO.

[Image source=AP Yonhap News]

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The day after DoorDash’s listing, Airbnb will be listed. Airbnb also initially proposed an IPO price range of $45 to $50 but recently raised it to $56 to $60.

The WSJ introduced that typically the IPO market is quiet in December, but this year shows a different pattern due to the impact of COVID-19. Considering COVID-19, roadshows are held via video conferencing, and IPOs are conducted through an auction method. Previously, IPO underwriters fixed the IPO price and allocated shares to potential investors, but now, prospective IPO subscribers input their desired price and quantity via computer. Through this new auction-style IPO, companies like DoorDash and Airbnb have increased their involvement in determining the listing price by accessing information similar to that of lead underwriters.

This content was produced with the assistance of AI translation services.