Red Hot IPOs: DoorDash exploded 86% Wednesday to $189.51 in its market debut, only a day after pricing its IPO at $102, which was above its $90-$95 range. According to CNBC, “DoorDash is being valued at 17 times revenue, assuming you take the last quarter and extend it over a year. By the same metric, Uber is valued at less than 8 times revenue, and GrubHub agreed to be acquired earlier this year for under 4 times sales. Lyft, which has a very limited food delivery business, trades for about 7.5 times revenue on that basis.”
To say this premium is absurd is frankly common sense. The food delivery business is not profitable and unlikely to ever become profitable and everyone is a loser for participating – The restaurants who lose money to fees, the delivery drivers who make almost no money, and the consumer who is paying $20 for an $8 salad.
A bit more quietly, following DoorDash an AI company called C3.ai surged 120.2% in its IPO. The IPO market is incredibly frothy and none of these valuations are likely to hold far into the future and everyone knows it. That being said, investor exuberance can keep them this high for months, if not years. In other news, Airbnb IPOs today and we will release our valuation of the company after its first trading day.
Facebook WhatsApp Strategy: WhatsApp isn’t popular in the US, but it is popular everywhere else. We shared this chart last week and are re-sharing it here to show the extent of WhatsApp’s global reach.

However, WhatsApp has yet to be really monetized the way other Facebook owned platforms have been through ads. Mark Zuckerberg now sees potential to monetize this massive WhatsApp user base by bringing on retailers to sell goods and services on the app or to even use the app to handle customer service requests per Bloomberg.
Bloomberg goes on, “For Facebook, a company that makes 99% of its revenue from advertising, WhatsApp presents a chance to diversify its business and protect itself from erosion in enthusiasm for its core social networking apps. Eventually, Facebook believes, it can control the entire exchange between a brand and its customer, starting with an ad on Facebook or Instagram and leading to an interaction or product sale on WhatsApp or Messenger.”
We particularly liked this quote in the article, “They say you need three things to survive: food, shelter, and clothes,” she says. “But in India you need four things: food, shelter, clothes, and WhatsApp.”
We look forward to Facebook’s continued transformation and how it intends to find additional sources of revenue such as this venture.
Tweets and Charts we like:
Agreed. We’ve always liked the idea of an index offering minus certain names or industries.
Staying true to today’s theme
Debt Raising Records

Business Insurance not helping
Sneak peak of what will happen in the US when we get past Covid

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