The 'Most Ridiculous IPO' Of 2020? Citron Hits DoorDash With $40 Target

Notorious short seller Citron Research is out with a report questioning the large valuation given to DoorDash Inc DASH from its recent IPO.

Citron On DoorDash: Citron calls DoorDash the "most ridiculous IPO of 2020" and assigns a $40 price target in a new report.

“There is no business that is more commoditized and competitive than having food delivered from the restaurant to your home,” Citron says.

The report says there is no differentiation between the players in the food delivery market and no brand loyalty for consumers who select based on the cheapest price.

Related Link: DoorDash IPO: 5 Key Takeaways Investors Need To Know

Citron On Valuation: The report questions how DoorDash can trade at 19 times sales when competitors like Uber Eats, owned by Uber Technologies UBER, and Grubhub trade for 3x to 6x sales multiples.

Five months ago, Postmates was acquired by Uber Eats for $2.65 billion, which was done at a multiple of 4x sales. A multiple of 4x sales for DoorDash would make shares worth $32.

DoorDash had market share of 33% in 2019.

“Dash is far from being the most dominant player in the market,” Citron said.

DoorDash raised capital at a $16 billion valuation earlier this year. Citron says nothing has changed since then except the company now being more expensive: “We don’t see how a food delivery can maintain a valuation of over $50 billion."

DASH Price Action: Shares of DoorDash are down 3% to $154.27 at publication time.

Posted In: CitronCitron ResearchFood DeliveryGrubHubshort reportUber EatsShort SellersShort IdeasTrading Ideas

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.