February 27, 2020 / 3:08 PM / a month ago

DoorDash files to go public in latest IPO test for unprofitable startups

(Reuters) - DoorDash Inc, the loss-making U.S. food delivery startup backed by SoftBank Group Corp (9984.T), said on Thursday it has filed for an initial public offering (IPO), setting it up to be one of the most high-profile listings of 2020.

FILE PHOTO: Cincinnati DoorDash worker Renee Shell delivers an order from Walmart in Cincinnati, Ohio, U.S., July 1, 2018. Photo taken July 1, 2018. REUTERS/Lisa Baertlein

The IPO will be yet another test of investor appetite for unprofitable Silicon Valley startups, after the likes of ride-hailing companies Uber Technologies Inc (UBER.N) and Lyft Inc (LYFT.O) struggled last year after going public.

“The number of shares to be offered and the price range for the proposed offering have not yet been determined,” DoorDash said in a statement. “The initial public offering is expected to take place after the SEC (Securities and Exchange Commission) completes its review process, subject to market and other conditions.”

The company has hired Goldman Sachs to lead the IPO, according to a person familiar with the matter. Goldman Sachs declined to comment.

DoorDash competes with Uber Eats, GrubHub Inc (GRUB.N) and Postmates Inc, and was last valued at around $13 billion after its most recent funding round in 2019, according to data platform PitchBook.

The market has shown it remains unforgiving toward loss-making companies so far in 2020. Earlier this month, mattress retailer Casper Sleep sold shares in its IPO at the bottom end of a targeted range it had already lowered, slashing its valuation by more than half in less than a year.

(Graphic: How recent high-profile IPOs have fared - here)

Postmates, which was last valued at $2.4 billion, said 12 months ago it had filed confidentially for an IPO but has yet to go public.

Last year, office-sharing startup WeWork was forced to scrap its high-profile debut, after investors raised concerns over its ballooning losses and leadership under founder Adam Neumann.

“The bigger issue is that DoorDash and the other food delivery services have been struggling to make money,” said Jay Ritter, an IPO expert and professor at the University of Florida.

The fallout from the coronavirus outbreak has already weighed on the timing of listings this year due to the concerns of its impact on the global economy and financial markets.

DoorDash counts SoftBank Vision Fund, DST Global, Temasek Capital and Sequoia Capital among its top investors.

In 2019, the company raised $600 million from its existing and new investors Darsana Capital Partners and Sands Capital.

Reporting by C Nivedita and Anirban Sen in Bengaluru and Joshua Franklin in New York; Editing by Anil D'Silva and Matthew Lewis

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