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DoorDash’s stock smashed expectations during its first day of public trading on Wednesday, soaring more than 84% by midday.
Initially priced at $102 in the IPO, the company’s shares began trading at $182 before quickly jumping to $188.50. That gives the delivery business a market value of nearly $60 billion.
“It’s a big day. It’s a big milestone,” Tony Xu, DoorDash CEO, said ahead of trading on Wednesday. “But it’s one day, and I’m much more concerned about the long run and how we’re going to continue chasing excellence…because that’s how we got to today in the first place.”
The company raised $3.37 billion in its IPO after selling 33 million shares. It had initially priced its IPO shares at $90 to $95, but it raised the price based on strong investor appetite.
DoorDash said the money from the IPO will be used to fund its continued expansion.
“Wow is the right word to sum it up,” said Mark Shmulik, analyst at brokerage firm AB Bernstein. “This surpassed even the most bullish expectations we got when we did our own surveys.”
Shmulik said the stock pop likely is a reaction to the information about the amount of money the company makes on each order that DoorDash revealed in the documents it filed ahead of its initial public offering. DoorDash is the first food delivery company to disclose that level of detail, giving analysts and investors a better understanding about whether food delivery can be profitable.
Tom White, analyst at investment banking firm D.A. Davidson, said he hadn’t expected to see such a large stock pop on DoorDash’s first day of trading. “It was clear there was going to be demand for the listing given that they raised the range,” he said. But “it’s a pretty explosive first day.”
DoorDash experienced massive growth this year after the coronavirus pandemic shut down cities nationwide and fueled demand for delivery services. The company’s revenue more than tripled to $1.9 billion during the first nine months of 2020 and produced the company’s first profitable quarter in the past two years.
But DoorDash’s growth, though accelerated by the pandemic, was already trending upward. In 2019 the company had $885 million in revenue, a 204% increase from the $291 million during the year prior. At the same time its losses grew from $207 million in 2018 to $668 million in 2019.
DoorDash has been expanding into new categories. In April, for example, it announced partnerships with regional U.S. Convenience stores to deliver household items like Advil, cereal, and ice cream. It also recently partnered with Sam’s Club Pharmacy, which will use DoorDash’s white-label software for its own prescription delivery service.
The big gain in DoorDash’s share price on Wednesday comes with somewhat of a dark cloud. It implies that DoorDash could have sold its IPO shares at a higher price, raising more money in the process—meaning it left hundreds of millions of dollars on the table.