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DoorDash, the leading food delivery app in the United States, filed its IPO prospectus with the Securities and Exchange Commission on Friday. The company will list its shares on the New York Stock Exchange under the symbol “DASH”.
DoorDash reported $ 1.9 billion in revenue for the nine months ended September 30. This is up from $ 587 million in the same period last year. As its revenue increased, DoorDash also reduced its net loss to $ 149 million over the same nine-month period in 2020. In 2019, DoorDash recorded a net loss of $ 533 million over the period. nine months.
The company said it has 1 million Dashers (or delivery people) and more than 18 million customers.
DoorDash will offer three classes of shares with different voting shares. Class A common shares will grant owners one vote per share. Class B shares will have 20 votes per share and class C shares will have no voting rights.
Offering multiple share classes has become common practice in Silicon Valley, especially when the CEO is also a founder, as is the case with Tony Xu of DoorDash. The prospectus says that Xu and his two co-founders, Andy Fang and Stanley Tang, are expected to enter into a voting deal that would give Xu the power to “direct the vote and vote the shares” of the Class B shares held by his co-founders. .
“As a result, Mr. Xu will be able to determine or significantly influence any action requiring the approval of our shareholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and our articles of association, and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction, ”the file indicates.
The company is looking to join its competitors GrubHub and Uber in the public market. DoorDash leads the US market share among them, with 49% of meal delivery sales in September, compared to 22% for Uber and 20% for GrubHub, according to analytics firm Second Measure.
DoorDash is one of the most anticipated IPOs of 2020. Although the pandemic has put a damper on plans for many companies, Airbnb, Roblox and Wish are all expected to go public by the end of the year, a CNBC reported Thursday.
DoorDash’s last private valuation was $ 16 billion and it has raised $ 2.5 billion so far.
DoorDash will become the last gig economy company to go public. The business model has raised questions about workers’ rights in recent years, as joint ventures often allow workers to take on tasks without being full-time employees.
California voters recently backed a proposal backed by DoorDash and other concert companies that will allow them to keep their workers as contractors, rather than employees, despite California’s new labor law aimed at changing that. This worker structure helps companies in concert like DoorDash and Uber avoid expenses like UI and paid time off, although the proposal included additional protections for workers.
Following the victory, CEO Tony Xu indicated that DoorDash would seek to broadcast similar proposals across the country.
The company said that a risk factor for its business is not “attracting and retaining Dashers profitably”.
“If we do not continue to provide Dashers with flexibility on our platform, compelling income earning opportunities and other incentive programs comparable or superior to our competitors, we risk not attracting new Dashers or to keep existing Dashers or to increase their use of our platform, ”says the file. Companies defending the California proposal have often argued that an employment-based model would compromise their ability to provide flexibility to workers, although labor experts and government officials have dismissed this argument.
DoorDash also says explicitly in the record, “If Dashers are reclassified as employees under federal or state law, our business, financial condition and results of operations would be affected.” The company says the reclassification would have a negative impact on the business due to things like legal injunctions prohibiting them from using existing business practices, employee benefit claims, and discrimination claims.
DoorDash also acknowledges in the filing that it has been the target of legal challenges over its failover model for Dashers and says the compensation model could continue to be a risk. The DC Attorney General sued DoorDash last year, for example, claiming that its old tip model was “misleading” because it would have led users to believe their tips would go directly to workers, when instead they compensated for the minimum wage guaranteed for workers by DoorDash.
Food delivery has been a rare bright spot during the pandemic, as consumers avoid restaurants and stay at home, sometimes under local restrictions to contain the virus. GrubHub stock, for example, has climbed more than 49% since inception, while the S&P 500 has risen around 9.5%.
DoorDash has warned among its risk factors that it may not be able to continue to grow at the rate seen during the pandemic.
“The circumstances that have accelerated the growth of our business due to the effects of the COVID-19 pandemic may not continue in the future, and we expect the growth rates of revenue, total orders and place GOV’s market will decline in future periods, ”the company disclosed.
The company also warned that intense competition and the ease and low cost of switching between food delivery options could threaten its business in the future despite its strong position in the US market today.
DoorDash has twice made CNBC’s 50 Disruptor List, which identifies 50 innovative private companies in various industries.
This story is developing. Check back for updates.
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