DoorDash Files Confidentially for IPO – Wall Street Journal

Written by Corrie Driebusch and Preetika Rana

Food-delivery provider DoorDash Inc. has filed for an initial public offering, firing the starting gun on what could be one of the year’s marquee listings.

The money-losing San Francisco startup said Thursday that it has confidentially filed paperwork for an IPO with the Securities and Exchange Commission. SEC rules allow companies to keep their listing documents private for a period of time leading up to a new offering.

The move sets up DoorDash to go public as soon as late spring, in what would be one of the most-watched IPOs of the year. It would provide a signal of the health of the new-issue market after a year when a number of closely watched debuts stumbled.

Though plunging stocks right now make markets inhospitable for IPOs—with major stock indexes in the U.S. down roughly 10% from recent highs on fears of the economic impact from the coronavirus epidemic—DoorDash and its underwriters at Goldman Sachs Group Inc. hope that the volatility will have passed by the time they are ready to push the button on the listing.

In addition to market conditions, however, they will have to contend with fickle IPO investors, who have grown warier of money-losing companies.

Seven-year-old DoorDash has expanded quickly and its private valuation ballooned. A funding round last year valued DoorDash at nearly $12.6 billion, up from just $1.4 billion in 2018.

But food delivery, an expensive undertaking, has gotten more challenging as competition grows fiercer. Industry players that began with largely separate geographic strongholds now overlap in many markets. Customer loyalty has dropped as rivals offer deep discounts to win business. Despite rapid growth, profits have remained largely elusive.

At Grubhub Inc., the biggest public U.S. company focused on food delivery, profit has shrunk and its shares have dropped more than 40% in the past year.

Meanwhile, investors have soured on Silicon Valley’s growth-at-all-costs strategy. Industries that gorged on a feast of venture capital, including food-delivery, are finding it harder to raise fresh cash.

In an ominous sign for DoorDash and its money-losing rival Postmates Inc., which is also considering a listing, unprofitable mattress seller Casper Sleep Inc. this month priced its IPO at the low end of an already-slashed range. The stock closed Thursday 25% below its IPO price.

The food-delivery companies are counting onpublic listings or mergers to shore up their finances. Postmates, which privately filed to go public early last year, chose not to proceed in 2019 after lackluster offerings from Uber Technologies Inc. and Lyft Inc. and the abortive listing of office-sharing startup We Co., according to a person familiar with its plans. The company is now considering going public this year, the person said.

DoorDash, Postmates and Uber’s food-delivery arm, Uber Eats, each discussed various possible combinations last year, according to people familiar with those talks, none of which has resulted in a deal.

Grubhub has talked to advisers about strategic options and says it sees itself as a potential acquirer.

The sector is also consolidating globally. British food-delivery company Just Eat PLC recently agreed to merge with the Netherlands’ Takeaway.com NV. Germany’s Delivery Hero SE agreed to buy a South Korean competitor for $4 billion in December.

Uber is pulling Eats out of countries in which it isn’t the No. 1 or No. 2 food-delivery player. Uber Eats sold its struggling India unit to a local competitor this year and quit South Korea last year. Uber said this week the head of Eats is leaving the company.

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By Maria Ordonez
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