I wouldn't be surprised if this thing is trading at $30 a year from now. This IPO was purely a case of ownership taking advantage of timing to raise as much cash as possible. That means the CEO thinks the company is worth ~$100/share. Do you really think that people are going to continue ordering in on weekends through an overpriced delivery service as soon as they can return to restaurants?ĥ) The CEO reportedly defended the IPO price by saying they priced it at a level they thought fairly reflected the value of the company. People love eating in restaurants and will flock back to them as soon as it is safe/allowed to do so. People have been using this service out of necessity but DoorDash doesn't provide a service that will permanently change the way people live. There are even reports of enterprising people starting their own local delivery services at lower rates.Ĥ) Future growth will plummet. There are reports of restaurants grouping together and doing their own shared delivery. Many restaurants offer customers incentives for picking up their food. Restaurants have been using them out of necessity but they are already finding ways around it. I posted an example yesterday about a sandwich I ordered that was $13.95 on the restaurant's online menu but $18.95 on the DoorDash menu. DoorDash takes a huge cut, which forces restaurants to raise their prices. There is nothing to keep customers loyal to DoorDash if someone else offers better service, or the same service at a better price.ģ) Restaurants hate them. Early in COVID I was using Skipthedishes until I got frustrated with poor service so I left. People couldn't care less who delivers their food, as long as it shows up on time and hot. At some point (because of 2-4 below) they will have to lower their fees and take rate, which will hurt margins even more.Ģ) No brand value or brand loyalty. Not only does this pose a risk to market share, but it poses a huge risk to the already thin profit margins. They're a delivery service - anyone can do what they do. Sure they have 50% market share but there are competitors.
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