DoorDash: The Most Ridiculous IPO Of 2020

Is it a coincidence that DoorDash (DASH) filed for its IPO so soon after vaccines for COVID-19 were announced? I think DoorDash’s current investors and bankers recognize that the window of opportunity to IPO this terrible business closes quickly when the threat of COVID-driven lockdowns no longer drives growth in food delivery demand.

With the latest S-1 filed, DoorDash is aiming for a price range of $75-$85, which could give the firm a valuation of $23.8 billion to $27.0 billion ($25.4 billion midpoint). Such a valuation would be well above the firm’s last private valuation of $16 billion. At a valuation of $25.4 billion, DoorDash earns an unattractive rating and would be the most ridiculous IPO of 2020. I think this proposed public equity offering holds no value, $0, beyond bailing out private investors before unsuspecting public investors realize the business is not viable in its current form.

This IPO reminds me of WeWork’s attempted IPO, which I called The Most Ridiculous IPO of 2019, because DoorDash’s business is similarly disadvantaged. The fact that this company made it to the pre-IPO stage reflects the overblown fervor of the work-from-home theme. It is not a good idea to invest in businesses that have:

  • no moat

  • no profits in the best-possible environment

  • competition that can offer the same service for free.

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