DoorDash

Yesterday DoorDash went public with an IPO price of $102. Before you look back and say I knew I should have bought DoorDash when it started trading it’s important to note that the vast majority of the public wouldn’t have paid $102/share, instead a better number for investors using the public stock market to look at is the open price of $182/share. You may have missed the huge surge from the IPO price, but the question now is should you buy it? I would say avoid this company. To begin I normally do not like to see when companies issue special voting stock to those at the top as it allows them to retain power, even if they do a poor job. In this case the CEO, Tony Xu, was issued special voting stock that gives him about 69% of the voting control. Another issue is this company is riding the wave of the pandemic as more people order from home, even with this they only made a profit of $23 million in Q2 and had a loss of $43 million in Q3. The company does now control about 50% of the food delivery market, but at what cost will they be able to retain that market share? Finally, these companies charge restaurants high fees for delivery which are around 20%. I know some local restaurants avoid these services because they are just too costly to the bottom line. With that said, if you are trying to support local restaurants at this time, PLEASE DO NOT order on these services as it does not greatly benefit the small business you are trying to help. Why, many small restaurants don’t even make a 20% profit. (Photo Source: Businessinsider.com)