DoorDash's stellar debut helps rewrite SoftBank's trackrecord

America's largest food delivery company saw its share price close up 86% on its first day of trading

DoorDash twitter account on a smartphone during the company's initial public offering on Wednesday, December 9, 2020. DoorDash opened 84% above its IPO price. That's the third-best opening pop of 2020, excluding deals that raised less than $1bn. BloombergShow less

The Covid-19 pandemic upended businesses globally and led to millions of people losing their jobs, but the health crisis also accelerated digitisation and for DoorDash, the US’s largest food delivery service, that was manifested in its stellar debut on the New York Stock Exchange.

With its stock closing 86 per cent higher than its initial public offering price on its first day of trading on Wednesday, valuing the company just above $60bn, the listing could not have been more successful.

For SoftBank Group, which posted a net profit of about 628 billion yen ($6bn) for the three months to the end of September, compared with a loss of 700bn yen in the same period a year earlier, DoorDash’s listing is a blessing after a muted Uber IPO and the implosion of WeWork.

DoorDash will further boost the $10bn gain to the group’s bottom line from its Vision Fund investments, that resulted in a $12.7bn operating loss in its last fiscal year. The Vision Fund’s 20 per cent stake in DoorDash reaped an $11.2bn gain on its $680 million investment in the company.

The challenge for DoorDash, which reported $1.9bn of revenue in the first nine months of the year as food delivery orders surged during the pandemic, is what will happen once the health crisis subsides and life returns to normal. The company narrowed its net loss to $149m in the first nine months of the year from a $533m loss in the same period a year earlier.

SoftBank, which is sitting on $80bn of cash, is likely to see more upside on its investments as more companies backed by the Japanese conglomerate, go public.

In September, home-selling platform Opendoor said it plans to list through a merger with a blank-cheque company that values the combined entity at $4.8bn. SoftBank had previously invested $400m in Opendoor.

SoftBank made about $1bn off its investment in Slack before the company agreed to be bought by Salesforce. The messaging platform benefitted from the pandemic, which forced people to work from home and companies to operate remotely.

SoftBank's Vision Fund, a heavy investor in companies harnessing artificial intelligence and other technologies, is likely to see further gains as more companies it has stakes in go public by the end of next year and help rewrite the company's track record, its chief executive told The National in an interview last month.

SoftBank's Vision Fund expects up to seven companies that it has stakes in to go public by the end of next year, SoftBank Investment Advisers chief executive Rajeev Misra said.

“The acceleration of disruption went up dramatically due to Covid. The market share gain achieved by many of our companies that would have taken three years to happen, happened in the last nine months. Many of our companies have huge tail winds,” Mr Misra.

“AI is going to disrupt and be a bigger disruptor than the internet, which took 20 years to disrupt a lot of industries.”