Food delivery service DoorDash has confidentially filed to go public. TechCrunch reports that the company has filed a draft registration statement on form S-1 with the Securities and Exchange Commission, according to a press release from DoorDash. The company didn’t name a specific time for the IPO, noting only that its expected to take place “after the SEC completes its review process.”
DoorDash, which has raised $2.1 billion is valued at $13 billion, is currently the leader among third-party delivery services in terms of marketshare, having unseated Grubhub from the number one spot in 2019. The company operates in all 50 U.S. states as well as parts of Canada and Melbourne, Australia, and in October of last year, DoorDash accounted for 35 percent of consumer spend on third-party delivery.
But will that lead be enough to sway the public market that DoorDash is a good buy? The Wall Street Journal reported last December that three-quarters of DoorDash’s markets weren’t profitable. While third-party delivery services are expected to gobble up 70 percent of all delivery orders by 2022, the entire third-party delivery services market is in the midst of an existential crisis.
Some of that crisis is self-inflicted as companies like DoorDash employed shady tactics when it came to paying its drivers. DoorDash is also among a group of gig economy companies spending $90 million to defeat California’s AB 5 law, which reclassifies contractors as employees. The entire third-party delivery model is built around cheap labor, and if more workplace regulations are enacted, then that could greatly impact the industry’s ability to make money.
But restaurants themselves are starting to question the value of third-party delivery services. In addition to tiring of the high fees for the pleasure of being on an app like DoorDash, more restaurants are realizing the value of owning the direct relationship with the customer, and not handing that over to someone else.
Then there is the whole issue of timing. DoorDash is setting to go public months after Postmates, another third-party delivery service, pulled its own IPO plans. And we are in a post WeWork debacle world, where numbers are more highly scrutinized than ever.
DoorDash going public is good news for us at The Spoon. It’s going to generate a ton of news to report and transparency into the third-party delivery world when it holds quarterly earnings.
Now we’ll just have to see if it’s going to be a good move for DoorDash, and other players in the space with similar ambitions.