DoorDash prepares to go public as stock market plunges

The food delivery market remains fiercely competitive, a broader reckoning is underway among high-flying tech startups, and stocks have been rattled in recent days by coronavirus fears. But none of that is stopping DoorDash from preparing to go public.

On Thursday, the same day US stocks fell into correction territory, DoorDash announced it had submitted confidential paperwork with the US Securities and Exchange Commission to go public.

The news comes not just amid general market turbulence, but upheaval in the meal delivery market specifically. This week, competitor Uber Eats named a new leader as the company works to grow its meal delivery service without bleeding as much money. GrubHub, another rival, has struggled on Wall Street in recent months after falling short on earnings and sales.

There have also been rumors of consolidation in the industry. GrubHub reportedly considered putting itself up for sale earlier this year, a prospect the company shot down. Another report said Uber and DoorDash were in talks last year about a possible merger, which did not pan out. DoorDash declined to comment on that report at the time.

DoorDash, which acquired premium restaurant delivery service Caviar in August, has emerged as the US leader in terms of sales. It surpassed Grubhub for the first time in May, according to analytics firm Second Measure, and remains in that spot. In January, DoorDash earned 38% of meal delivery sales in the US, according to Second Measure.

The company was valued at $12.6 billion when it raised $600 million last May. Among its investors is SoftBank, the Japanese conglomerate that has faced scrutiny as of late after one of its most high-profile investments, WeWork, failed to pull off an IPO last year. (Uber, another SoftBank investment, has struggled on Wall Street in large part because of its steep losses.)

DoorDash is not without its fair share of question marks. Along with other food and gig economy startups, it is facing a number of regulatory battles in markets such as New York City and the state of California.

It has also been criticized for a controversial tipping policy for delivery workers, where some tips contributed to their base pay. The policy, which has since been changed, is the subject of a lawsuit brought by DC Attorney General Karl Racine in November that seeks to recover the “millions of dollars in tips that were used to subsidize DoorDash’s payments to Dashers,” and impose civil penalties.

At the time, a DoorDash spokesperson called the complaint “without merit.”

The company was previously said to be exploring a direct listing, a method that lets companies bypass underwriting fees, avoid road shows and go public without needing to raise money. While unusual, this approach has been used recently by Spotify and Slack.

But just because the company has filed paperwork to go public doesn’t mean it will do so anytime soon. Postmates, another delivery startup, made a similar announcement last February, but has yet to make its Wall Street debut.