This 2020 IPO raised $3.4 billion and its shares are up 151% in one year | Smart Change: Personal Finance
With a possible slowdown on the horizon DoorDash (NYSE:DASH) considering expansion into related services. In this clip from “IPO & SPAC Show” on Motley Fool Live, recorded on 11.4Motley Fool contributor Nicholas Rossolillo discusses DoorDash’s finances and performance over the past two years and analyzes where it’s headed.
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Nicholas Rossolillo: I’m trying to imagine a company in 2020 that didn’t have more hype than DoorDash. As we may all have personal experience, if you wanted to eat out at some spots in 2020 you couldn’t do so unless you had the food delivered. With this in mind, DoorDash comes with their IPO. Mind you, by the time they had their IPO, this is like a seven year old company. So very, very young, and now they’re coming out raising nearly $3.4 billion in cash with their IPO, probably for good reason. Everyone was thrilled that this sales number grew by over 200% year-on-year in 2020 because everyone still wanted to eat out, but where do you do that? DoorDash. DoorDash is the number one choice. I should mention, 85% above IPO price on debut in public trading. Things then turned turbulent as everyone worried about the economy reopening. Will DoorDash’s growth story endure? But it’s been a pretty resilient stock. It was up over 150% in November 2021 ahead of the dreadful looking chart from that point. In 2020, free cash flow was positive despite huge operating losses of $436 million. Let’s catch up now. It was a sustained growth company. Fourth-quarter revenue rose 34% but was down sharply. Full-year sales in 2021 grew just 69%. It was free cash flow positive at $455 million. Again large deviation from operating loss. A lot of this has to do with stock-based compensation, which paid out a large amount last year, as well as a percentage of the company’s total market cap, and they’ve also made some acquisitions, despite the free cash flow positive nature of this business. Less cash in short-term investments on its balance sheet compared to $3.75 billion a year ago. One of the big, more recent acquisitions was a company called Wolt. It was actually an all-stock transaction that didn’t cost any money but expanded its delivery services to Europe. I think the big story here, as we move into 2022, is another major expected slowdown in their growth. Their marketplace, basically the value of orders placed on their marketplace, is only expected to increase by 14% this year, and so their key initiative for them is to expand on adjacent services like grocery delivery and convenience store orders and the like to expand, i.e. beyond the pure restaurant delivery service. This will be a key component for DoorDash at this point.
Nicholas Rossolillo has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends DoorDash, Inc. The Motley Fool has a disclosure policy.
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