By: Dexter Braff

From the Ministry of the Obvious: DoorDash’s IPO is Nuts

How many times have we been here?  It’s only been a year since We Work was valued at $47 billion, only to see its value crash land 70% in just 30 days.

Now we have DoorDash, one of the companies that won the pandemic.

Check out this madness.

According to PitchBook, when the company completed its 8th round of venture capital financing on November 13, 2019, its pre-money valuation was $12 billion.  Not bad for a company which closed out the year with revenues of $885 million (that’s million with an “M”) and net income of minus $602 million – a valuation of 13.6 x revenues.

Then the pandemic hit, and revenues soared, because, you know, food delivery.

Through September 30, 2020, revenues were $1.9B.  But with Q3 revenues of 879M, you could argue that the 12-month revenue run rate was around $3.5B – if you were optimistic(?) that the pandemic would become a fixture of American life.

With an IPO price of $102 per share, in less than a year, DoorDash’s value rose 67% to a smidge over $32B.

But by end of its first trading day, the stock price rose to $189.51, sending its valuation soaring to $60B, or 17.1 x run rate revenues – again, run rate revenues inflated by the pandemic, because, you know, food delivery.

In its offering, DoorDash conceded that its lockdown fueled growth might not be sustainable.

Ya think?

Is there anyone out there that thinks that meal delivery won’t go down, probably a lot, once the pandemic ends?  Buehler?  Buehler?

Yet investors shrugged off any concern that DoorDash’s inflated revenues would fall (mind you this is after we learned that there were three effective vaccines in the offing), and instead mused that they would continue to grow at a breakneck pace.

Nuts.

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