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DoorDash went public on December 9 on the NYSE.
Courtesy of NYSE
DoorDash
the shares came under selling pressure on Thursday after short-selling company Citron Research issued a negatively aggressive report on the food supply company, setting a $ 40 price target and repeating the statement. another analyst who is “the most ridiculous IPO of 2020”.
The Citron report argues that DoorDash (ticker: DASH) is in a highly commodified business with little competitive advantage, and that the fundamentals cannot justify the company’s nearly $ 50 billion valuation.
“In a year of many interesting IPOs, from the platform of harmful data
Snow flake
to the leader in big data software
Palantir
in the mobile game engine
Unit,
there is an IPO that stands out from the rest, as not all IPOs are the same … DoorDash “, Citron writes in the report.” There is no company that is more commercialized and competitive than receiving food from the restaurant in There is no differentiation between Uber Eats, Postmates, Caviar,
Grubhub,
DoorDash or any local provider. Even worse, this business model has no brand loyalty, as the consumer only chooses who will deliver their food at the cheapest price. ”
DoorDash declined to comment on the Citron report.
Note that Uber Eats recently acquired Postmates and DoorDash itself bought Caviar in 2019, so the competitive set isn’t as big as the report implies and the report is affected by some other inaccuracies.
Citron claims that DoorDash trades in sales 19 times, which is an exaggeration; The company is likely to post revenue of about $ 4 billion this year this year, which would be 12 times the multiple, although it is certainly much more than the four-fold sales multiple that
Just eat Takeaway.com
is paying for Grubhub (GRUB).
In addition, Citron notes that DoorDash had 33% of the U.S. market in 2019, but does not credit the company for recent reports that place its current market share at 50%.
Meanwhile, Citron uses the same headline in its research note: “The Most Ridiculous IPO of 2020,” according to a report released Dec. 2 by boutique research firm New Constructs. This report also broadly includes the words “The Most Ridiculous IPO of 2020,” making this one of the most ridiculous examples of major plagiarism in 2020. In fact, New Constructs on November 23 had published a previous version of their DoorDash bass report with the same headline.)
Citron’s most important point is that day traders have “recklessly” offered DoorDash shares without doing the necessary due diligence. “With numerous IPOs and SPACs that go on the market and offer investors the opportunity to bet on space, electric vehicles and other disruptive technologies, we do not see how a food is delivered [company] can hold a valuation of more than $ 50 billion, “he writes.” See you at $ 40. “
Shares of DoorDash fell 2.4 percent to $ 154.25 on Thursday. The S&P 500 rose 0.6%.
Write to Eric J. Savitz to [email protected]