Tuesday's Market Minute: Food Delivery Boom Sets Stage For DoorDash's Debut

At the end of 2019, food delivery stock GrubHub had fallen roughly 80% from all-time highs of $149 per share. Companies in the food delivery space were struggling to stay ahead, with crowding competition hindering their returns. Then the pandemic unraveled in the first quarter of 2020, and the delivery space swiftly transformed. Uber Technologies Inc’s UBER delivery service reported $1.45 billion in sales between the period of July through September, compared to $645 million during the same period last year. Uber, which is planning to acquire food delivery company Postmates, has risen 80% this year. GrubHub Inc GRUB remains below all-time highs but has grown roughly 40% year-to-date.

This week, DoorDash is expected to list its shares publicly. The company, which also owns food delivery app Caviar, reported revenue of $1.92 billion in the nine months ending in September compared to $587 million for the same period a year ago. According to regulatory filing earlier this year, it recorded 543 million orders through September versus 181 million orders last year.

The surge in delivery orders has led to an increase in demand for new workers. It is estimated there were roughly 50,000 delivery workers prior to Covid-19. Uber alone added 36,000 couriers in New York since just March.

Currently, DoorDash is the number one company in the food delivery market in terms of market share. The company’s market share was roughly 17% in January 2018, and as of October is 50%. The company is planning to sell 33 million shares at a price of $90-$95 on the Nasdaq under ticker symbol ‘DASH’. However, DoorDash did warn in its IPO filing that the pandemic-related rush in delivery may not last forever. The company said, “The circumstances that have accelerated the growth of our business stemming from the effects of the Covid-19 pandemic may not continue in the future.”

Photo by Griffin Wooldridge on Unsplash