This Small Cap Stock Could Be A Cheaper Way To Play DoorDash, Uber Eats

Food delivery leader DoorDash DASH hit the public market with its highly anticipated IPO Wednesday. A small cap food delivery company traded higher in sympathy and could be a cheaper option to consider.

DoorDash IPO: DoorDash shares opened for trading at $182 a share, significantly higher than the $102 offering price that saw the company raise $3.4 billion.

The food delivery market was highly fragmented, but has shifted to two market leaders through a series of acquisitions and competitive pricing. DoorDash holds a 50% market share of food delivery with rival Uber Eats, owned by Uber Technologies UBER following close behind.

Waitr Holdings Inc WTRH is a small competitor to DoorDash and Uber Eats focusing on underserved markets in the U.S. and is in over 700 cities.

Waitr Holdings is a former SPAC that went public by Lancadia Holdings, the same team bringing Golden Nugget Online public via the Lancadia Holdings Inc II LCA SPAC.

Related Link: DoorDash, Uber Eats Have Duopoly And Are Here To Stay, Cramer Says

Financials: In the third quarter, Waitr Holdings saw revenue grow 7% year-over-year to $52.7 million.

Net income for the company was $4.6 million in the third quarter, which was a significant improvement from the loss of $220.1 million reporting in the prior year’s third quarter.

This was the second consecutive quarter of profitability for the company.

“We achieved a second consecutive quarter of continued profitability and operating cash flow, which we believe is the result of our fundamental strategic initiatives and focus on operating a profitable business,” said CEO Carl Grimstad.

What’s Next: Waitr Holdings has worked on improving its liquidity. The company ended September with $77.1 million in cash and completed an at-the-market common share equity offering in the third quarter.

The company is also moving into what it calls a “dine-in” offering. Waitr partnered with restaurants to offer socially distanced tableside service with an integrated payment solution. The new offering helps restaurants improve their safety protocols and sales.

“Additionally, the company has continued its expansion into new delivery verticals such as same-day groceries and alcohol delivery services,” the company said in its third-quarter release.

Benzinga’s Take: The valuation of DoorDash more than doubled this year prior to the opening price of $182.

Waitr Holdings is a small niche player in the food delivery market. The path to profitability could lead to a rebound in shares that have fallen from their $10 SPAC offering price.

Waitr Holdings could be an acquisition target for DoorDash or Uber Eats as they aggressively fight each other for food delivery dominance.

Price Action: Shares of Waitr Holdings were up double digits in the early trading Wednesday, hitting an intraday high of $4.53. The stock sold off throughout the afternoon, closing down 4.8% at $3.75.