DoorDash shares soared more than 80% in their debut on Wall Street yesterday, valuing the food delivery company at $71.3 billion or more than four times its worth at a private fundraising round six months ago.
The big jump underscored investor appetite for technology companies boosted by the Covid-19 pandemic.
Shares opened at $182 on the New York Stock Exchange, significantly above the initial public offering (IPO) price of $102 apiece and closed at $189.51.
The company had raised $3.37 billion in its IPO on Tuesday.
Such a large first-day trading gain is likely to fuel criticism from some venture capital investors, who argue investment banks underprice IPOs so their investor clients can score large gains when the stock starts trading.
DoorDash co-founder and chief executive Tony Xu, whose stake in DoorDash is worth $2.8 billion based on the stock's closing price, said he had no regrets over the company's IPO price.
"We priced our stock where we did not take every last dollar off the table but where we feel like is a true reflection of our fundamentals," Xu said.
"A lot of people probably want to get access to DoorDash stock and not a of people want to sell DoorDash stock. That's how some of these price fluctuations are constructed and created. That's never the goal of the process," Xu added.
The IPO gives DoorDash a fully diluted valuation - which includes securities such as options and restricted stock units - of $71.2 billion, far higher than the $16 billion it commanded in a June private fundraising round.
Its market capitalisation is around $60.2 billion, more than restaurant chain Chipotle Mexican Grill and lift-hailing company Lyft combined.
Founded in 2013, DoorDash is backed by the Vision Fund managed by Japanese tech giant SoftBank Group, venture capital firm Sequoia Capital and sovereign wealth fund Government of Singapore Investment.
The company and rivals Uber Eats, Grubhub and Postmates have benefited from a surge in demand for food delivery services due to Covid-19 restrictions.
DoorDash revenue for the third quarter ended September reached $879m, up from $239m the same time last year. The company posted a loss of $43m after reporting its first quarterly profit of $23m three months earlier.
Highlighting investor enthusiasm for technology companies, shares in C3Ai, founded by billionaire tech entrepreneur Tom Siebel, more than doubled in their debut yesterday, while Pubmatic, which develops software for digital advertising businesses, saw its shares rise more than 40%.
"These high tech companies that are involved in technologies that facilitate communication like Zoom or facilitate the acceleration of digital transformation, they seem to be very well received by financial markets," Siebel said in an interview.
A number of big Silicon Valley companies, including Palantir Technologies and Snowflake, also had blockbuster initial public offerings (IPOs), riding on a stock market rally in the second half of the year that was fueled by stimulus money and hopes of an effective Covid-19 vaccine.
DoorDash's listing gains bode well for home rental startup Airbnb, which is scheduled to make a highly-anticipated market debut today.
