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DoorDash is expected to IPO this week. Its timing is perfect. Last week, DASH raised its IPO price range from $75-85 to $90-95, which would raise $2.96B in the listing at the midpoint after deducting expenses and $3.1B at the high end. The company is targeting a valuation above $37B. Its private valuation grew to $15B this year from $1.4B in 2018 as its market share of the U.S. food delivery market expanded.
The pandemic boosted results for DoorDash in several ways. It drove restaurants and consumers to the delivery platforms. Restaurants that previously were not considering delivery looked to delivery as a lifeline. It shifted meal consumption to the home—consumers who had the propensity to eat out but could not or would not increase their delivery orders. DoorDash's suburban strategy benefited from city workers staying home and ordering restaurant deliveries from home instead of the workplace.
DoorDash has gained at the expense of Grubhub. The question is whether Just Eat Takeaway can stop the share losses at Grubhub once the merger closes in a few months. How will the strategy change for Grubhub - will it focus on growth or profitability?
For DoorDash to succeed, Grubhub needs to continue failing under Just Eat Takeaway. DoorDash has its eye on more than just food delivery. It is making early moves into grocery, logistics, and last-mile delivery. DoorDash has targeted significant TAMs. The consolidation and disruption in the industries are only just getting started.
Our thesis bullets are as follows:
