Even in a bull market for delivery, expenses eat up all of the money these companies generate, and then some.

With food delivery playing a leading role in the Yet investors might want to use caution before grabbing a slice of this third-party food delivery provider.A DoorDash delivery scooter. Retirement By using this site you agree to the There was no proposed date for an initial offering, which could be a long way off.

The companies have also found it necessary to be Beyond profits, food delivery companies including DoorDash have faced heavy criticism over how they charge restaurants, listing restaurants that haven't partnered with them, and how they use their drivers' tip money, which has often been opaque, though DoorDash has promised greater transparency.And the fees the services charge restaurants can rise to exorbitant levels even if they're giving restaurants discounts during the pandemic.DoorDash has partnered with major chains for delivery, including Chick-fil-A, Yet the other players are expanding beyond food as well, so the competitive landscape is only intensifying.Investors really don't know what DoorDash looks like under the hood just yet, but that will come as the IPO draws nearer and more details are released.From what we do know so far about the food delivery app and the industry it leads, it is not a business that is sustainable from an investment point of view. It is the fastest-growing third-party delivery app and quickly grew to command the largest share of the market with 45% in June, according to analytics firm Second Measure. DoorDash has also been acquisitive, buying Caviar last year for $410 million, and it had been in talks with Uber a year ago about a possible merger. See you at the top! Grubhub saw its stock plunge last fall after slashing full-year revenue expectations, citing costs associated with gaining customer loyalty in a crowded field.

Have a story idea? The San Francisco-based company said Thursday that it had filed paperwork with the Securities Exchange Commission outlining its proposed public stock offering. In New York, the City Council is considering a legislation to cap the commissions that food delivery apps charge restaurants. Personal Finance Delivery represents only about 3% of all restaurant orders, according to market research firm NDP.Delivery companies are also facing legal battles over business practices that critics say harm both restaurants and freelance workers that deliver meals.DoorDash has pledged $30 million to fight a new California law that would give contractors workplace protections of full-fledged employees.

Cumulative Growth of a $10,000 Investment in Stock AdvisorWhy a DoorDash IPO Might not Deliver for Investors @themotleyfool #stocks $GRUB $UBER $WTRH $TKAY.Y Stock Market Returns as of 09/03/2020. Image source: DoorDash.DoorDash certainly looks well positioned to make a public debut. (TMFCop) But, DoorDash stock fits the mold of high-growth, disruptive business models that the Fool typically recommends. Because the industry is consolidating due to intensifying competitive pressure, buying into DoorDash's IPO may not be a good idea.And both Uber and Grubhub have also faced heightened worries about their ability to become profitable after they went public. His coverage reflects his passion for motorcycles, booze, and guns (though typically not all exercised at the same time), but his writing also covers the broader sectors of consumer goods, technology, and industrials.
DoorDash quietly files paperwork to go public - MarketWatch


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