DoorDash IPO filing shows huge growth and lots of risk

The company's business and finances would be "adversely affected" if it's forced to make delivery workers employees, it says in a filing.

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DoorDash is headed to Wall Street.

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Food delivery service DoorDash on Friday filed paperwork with the US Securities and Exchange Commission for an initial public offering. The S-1 filing, more than 200 pages long, shows that the company reported $1.9 billion in revenue for the nine months that ended Sept. 30, up from $587 million during the same period last year. 

The company also reported a net loss of $149 million in the first nine months of this year, which is less than the $533 million net loss it reported during the same time in 2019.

The past few months have been booming for DoorDash, as the novel coronavirus has caused people around the world to shelter-in-place and stay indoors. The company has gained millions of customers who avoid going to restaurants and instead order their meals through the platform.

"Fighting for the underdog is part of who I am and what we stand for as a company," CEO and co-founder Tony Xu wrote in a letter included with the filing. "Having spoken to countless merchants since DoorDash's founding in 2013 -- from a Mom and Pop store like Oren's Hummus to the General Managers of Chili's (aka "ChiliHeads") -- I am humbled by their relentless drive to create and build, and their contribution to their communities."

DoorDash said in the filing it has more than 18 million customers, more than 390,000 merchants on its platform and more than 1 million delivery workers, known as Dashers. The company also said it had more than 5 million DashPass members, who pay $10 a month for unlimited deliveries from eligible merchants. 

"If we can make possible the delivery of ice cream before it melts, or pizza before it gets cold, or groceries in an hour, we can make the on-demand delivery of anything within a city a reality," Xu wrote in his letter. DoorDash, which is known primarily for restaurant food delivery, added grocery delivery in August.

DoorDash was one of the top backers of the contentious Proposition 22 ballot measure campaign in California, which passed with 58% of the vote on Nov. 3. The proposition was authored by DoorDash, Uber, Lyft, Instacart and Postmates and changed California law so that the gig economy companies don't have to classify their drivers and delivery workers as employees. DoorDash contributed more than $48 million to the campaign, which raised a record-breaking total of $205 million.

Those opposed to the ballot measure criticized the companies for reportedly exploiting workers. Labor and driver activists say workers should be classified as employees to get basic labor benefits, like minimum wage, health care and sick leave -- especially since they've been considered essential workers during the pandemic.

"The only innovative thing about DoorDash and most other gig economy marketplaces are the creative ways they've found to financially abuse the labor side (delivery people) of their marketplace," said Adam Jackson, CEO of freelancer platform Braintrust, which lets workers have more control and keep all of their earnings. "Even when you add in the systematic theft from the supply-side of their network, these are still shit bag businesses."

Watch this: Food delivery apps compared: DoorDash vs. Uber Eats

DoorDash has said that it plans to work with other gig economy companies to bring the Proposition 22 model to the rest of the US.

In its filing on Friday, DoorDash said, "If Dashers are reclassified as employees under federal or state law, our business, financial condition, and results of operations would be adversely affected." The company said those adverse affects could come from situations like legal injunctions stopping the company from using its existing business practices, along with discrimination claims and employee benefits claims. 

Another risk factor to its business, DoorDash said in the filing, is its ability to "cost-effectively attract and retain Dashers." The company added that "negative perception of our platform or company may harm our reputation, brand, and local network effects."

DoorDash raised $2.5 billion as a private company and its last private valuation was $16 billion. By comparison, Uber's current valuation as a public company is $83 billion. DoorDash's biggest competitors are Uber and GrubHub. In September, DoorDash had 49% of meal delivery sales, while Uber had 22% and GrubHub had 20%, according to analytics firm Second Measure.

In its filing, DoorDash said that despite its strong standing in the US market, intense competition and customers who go back-and-forth between apps could pose a threat to its future business.

The company plans to trade on the New York Stock Exchange with the symbol DASH. Trading is expected to begin in mid-December.