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DoorDash sparks investor feeding frenzy as stock closes up 85% in debut

After pricing its shares at $102 apiece, it ended up closing at $189.

DoorDash

As part of the IPO process, DoorDash had tried to exert a little bit more control over the pricing by running a hybrid auction process.

Photo: DoorDash

Investors clearly showed an appetite for DoorDash shares as the food delivery company started trading on the NYSE on Wednesday.


After pricing its shares at $102 apiece on Tuesday, the stock began trading at $182, a giant pop for the company. It ended up closing at $189, up 85% for the day.

On the heels of the large pop, DoorDash CFO Prabir Adarkar said he was "humbled by the excitement the investor community is expressing" in the food delivery business.

"The way today is different than yesterday is that, starting today, investors determine the value of our company," Adarkar told Protocol. "You can question it, I can question it, but as a matter, investors ultimately decide it. At DoorDash we like to focus on the things you can control, and for me, that means to support our merchants, our Dashers and our consumers. Over the long run, the stock price will take care of itself."

As part of the IPO process, though, DoorDash had tried to exert a little bit more control over the pricing by running a hybrid auction process, similar to what Unity did earlier this fall.

The traditional IPO process has drawn a lot of criticism in recent years from Silicon Valley's investor community for leaving so-called "money on the table" with "mispriced" IPOs that result in huge pops. While some companies have experimented with direct listings, or even gone the nontraditional SPAC route, DoorDash and Airbnb both went for the auction model where buyers can submit orders for the price and number of shares that they're ordering to give a little bit more insight and visibility for pricing the IPO.

But Adarkar shrugged off any concern that DoorDash had left any money on the table thanks to its first day gains. "We're comfortable with how we priced the stock," he said. "Remember that there's data that's available in terms of the orders that are being placed, whereas the trading price sometimes reflects consumer demand that is perhaps for a smaller number of shares than what the company has decided to sell in its IPO. You or I could go into Robinhood and buy one share for whatever price it's at now, but it's a very different proposition than selling 33 million shares."

So far, investors have bought into DoorDash's business, despite remaining unprofitable and in a highly competitive market. This year, DoorDash emerged as the clear market leader, despite a number of well-funded competitors.

When it launched in 2013, rivals like Postmates, Caviar and Grubhub already existed and had raised funding. But the last year saw some consolidation in the market, with Just Eat Takeaway acquiring Grubhub in June and Postmates selling to Uber Eats in July. DoorDash even bought Caviar from its parent company, Square, in August 2019.

"The names may change, but make no mistake that this has been a fiercely competitive market from the beginning. DoorDash, from a management perspective, has historically had much less cash than competitors, and so we had to build a better product and offer the consumer the widest selection of restaurants possible," Adarkar said. "So while going public is an important milestone, we can't let it distract us from the core strategy that has enabled us to be successful up until this point."

The next test for DoorDash will be whether its business can keep the momentum going after the pandemic, or if it will be lumped into the "stay at home stock" category with companies like Peloton that have seen a boon in sales thanks to pandemic, but whose sticking power could be questioned once a vaccine rolls out. Adarkar isn't worried and firmly believes that this is not the peak of DoorDash, but the next point in its growth story.

"Food is only about 10% penetrated, which is much lower compared to other categories like ecommerce or online travel," he said. "So I view this as a point in time in a much longer journey."

Power

Yes, GameStop is a content moderation issue for Reddit

The same tools that can be used to build mass movements can be used by bad actors to manipulate the masses later on. Consider Reddit warned.

WallStreetBets' behavior may not be illegal. But that doesn't mean it's not a problem for Reddit.

Image: Omar Marques/Getty Images

The Redditors who are driving up the cost of GameStop stock just to pwn the hedge funds that bet on its demise may not be breaking the law. But this show of force by the subreddit r/WallStreetBets still represents a new and uncharted front in the evolution of content moderation on social media platforms.

In a statement to Protocol, a Reddit spokesperson said the company's site-wide policies "prohibit posting illegal content or soliciting or facilitating illegal transactions. We will review and cooperate with valid law enforcement investigations or actions as needed."

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Issie Lapowsky
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
Protocol | China

Everything you need to know about the Kuaishou IPO

Kuaishou could raise just over $6 billion at a $60 billion valuation.

Kuaishou's livestreaming platform is part Twitch, part QVC.

Photo: Visual China Group/Getty Images

Kuaishou has more daily active users than Twitter and Snapchat. Still, it wouldn't be all that surprising if you've never heard of the short-form video and livestreaming platform; Kuaishou maintains a relatively low profile outside of China. Within China, the Beijing-based company has charted an ambitious plan to create a platform that seamlessly blends ecommerce, livestreaming, short-form video and gaming distribution.

In the lead-up to its Hong Kong stock exchange trading debut slated for Feb. 5, Kuaishou could raise just over $6 billion at a $60 billion valuation. If Kuaishou succeeds, it will have pulled off one of the largest IPOs in recent years.

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Hirsh Chitkara
Hirsh Chitkara (@ChitkaraHirsh) is a researcher at Protocol, based out of New York City. Before joining Protocol, he worked for Business Insider Intelligence, where he wrote about Big Tech, telecoms, workplace privacy, smart cities, and geopolitics. He also worked on the Strategy & Analytics team at the Cleveland Indians.
Power

Everything you need to know about the Roblox direct listing

The company is expected to go public via direct listing on the New York Stock Exchange in February.

Roblox CEO David Baszucki is taking the company public.

Photo: Ian Tuttle/Getty Images

Roblox is a video game platform, though it describes itself alternatively as a "metaverse," "human co-experience platform" and "new category of human interaction." It's expected to go public via direct listing on the New York Stock Exchange in February.

In simpler terms, Roblox enables developers to build games within the Roblox virtual world, which looks like a crossover between Minecraft and Lego. Developers publish and distribute their games through Roblox to an audience of some 31.1 million daily active users.

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Hirsh Chitkara
Hirsh Chitkara (@ChitkaraHirsh) is a researcher at Protocol, based out of New York City. Before joining Protocol, he worked for Business Insider Intelligence, where he wrote about Big Tech, telecoms, workplace privacy, smart cities, and geopolitics. He also worked on the Strategy & Analytics team at the Cleveland Indians.
Protocol | China

More women are joining China's tech elite, but 'Wolf Culture' isn't going away

It turns out getting rid of misogyny in Chinese tech isn't just a numbers game.

Chinese tech companies that claim to value female empowerment may act differently behind closed doors.

Photo: Qilai Shen/Getty Images

A woman we'll call Fan had heard about the men of Alibaba before she joined its high-profile affiliate about three years ago. Some of them were "greasy," she said, to use a Chinese term often describing middle-aged men with poor boundaries. Fan tells Protocol that lewd conversations were omnipresent at team meetings and private events, and even women would feel compelled to crack off-color jokes in front of the men. Some male supervisors treated younger female colleagues like personal assistants.

Within six months, despite the cachet the lucrative job carried, Fan wanted to quit.

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Shen Lu

Shen Lu is a Reporter with Protocol | China. She has spent six years covering China from inside and outside its borders. Previously, she was a fellow at Asia Society's ChinaFile and a Beijing-based producer for CNN. Her writing has appeared in Foreign Policy, The New York Times and POLITICO, among other publications. Shen Lu is a founding member of Chinese Storytellers, a community serving and elevating Chinese professionals in the global media industry.

People

Poshmark made ecommerce social. Wall Street is on board.

"When we go social, we're not going back," says co-founder Tracy Sun.

Tracy Sun is Poshmark's co-founder and SVP of new markets.

Photo: Poshmark/Ken Jay

Investors were keen to buy into Poshmark's vision for the future of retail — one that is social, online and secondhand. The company's stock price more than doubled within a few minutes of its Nasdaq debut this morning, rising from $42 to $103.

Poshmark is anything but an overnight success. The California-based company, founded in 2011, has steadily attracted a community of 31.7 million active users to its marketplace for secondhand apparel, accessories, footwear, home and beauty products. In 2019, these users spent an average of 27 minutes per day on the platform, placing it in the same realm as some of the most popular social media services. This is likely why Poshmark points out in its S-1 that it isn't just an ecommerce platform, but a "social marketplace." Users can like, comment, share and follow other buyers and sellers on the platform.

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Hirsh Chitkara
Hirsh Chitkara (@ChitkaraHirsh) is a researcher at Protocol, based out of New York City. Before joining Protocol, he worked for Business Insider Intelligence, where he wrote about Big Tech, telecoms, workplace privacy, smart cities, and geopolitics. He also worked on the Strategy & Analytics team at the Cleveland Indians.
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