The 'Most Ridiculous IPO' Of 2020? Citron Hits DoorDash With $40 Target

Notorious short seller Citron Research is out with a report questioning the large valuation given to DoorDash Inc DASH from its recent IPO.

Citron On DoorDash: Citron calls DoorDash the "most ridiculous IPO of 2020" and assigns a $40 price target in a new report.

“There is no business that is more commoditized and competitive than having food delivered from the restaurant to your home,” Citron says.

The report says there is no differentiation between the players in the food delivery market and no brand loyalty for consumers who select based on the cheapest price.

Related Link: DoorDash IPO: 5 Key Takeaways Investors Need To Know

Citron On Valuation: The report questions how DoorDash can trade at 19 times sales when competitors like Uber Eats, owned by Uber Technologies UBER, and Grubhub trade for 3x to 6x sales multiples.

Five months ago, Postmates was acquired by Uber Eats for $2.65 billion, which was done at a multiple of 4x sales. A multiple of 4x sales for DoorDash would make shares worth $32.

DoorDash had market share of 33% in 2019.

“Dash is far from being the most dominant player in the market,” Citron said.

DoorDash raised capital at a $16 billion valuation earlier this year. Citron says nothing has changed since then except the company now being more expensive: “We don’t see how a food delivery can maintain a valuation of over $50 billion."

DASH Price Action: Shares of DoorDash are down 3% to $154.27 at publication time.