We cap off one of the most eventful years in the stock market with a rush of big name tech IPOs including Airbnb, Roblox, Affirm and the star of today — DoorDash.

DoorDash, the popular US food-delivery app, filed to go public on Nov. 13 and it was revealed yesterday that the company is seeking a value of $32b.

(Catchup with our breakdown of Airbnb and Roblox’s IPO)

The best version of DoorDash

A surge in food delivery demand brought out the best version of DoorDash, whose revenue grew more than 3x in the first 9 months of 2020 compared to the previous year.

• Net losses of $149m in the first 9 months of 2020, down from a loss of $533m in the same period of 2019.
• US market share grew from 17% in Jan. 2018 to ~50% in Oct. 2020, overtaking its competitors — UberUBER
  and GrubhubGRUB
  .

The pandemic also gave restaurants a choice — shutdown or use food delivery apps. Restaurants reluctantly enlisted on these apps which also meant high fees that often made orders unprofitable.

Once the world returns to normal, DoorDash will have to convince restaurants to stay on its platform. The second challenge will be convincing hungry shoppers to continue ordering through food delivery apps post-pandemic. Failure to do either could slow sales growth — a red flag for investors.

Dashing IPO you got there

Here’s how DoorDash is trying to sell you on its IPO:

• “Future” profitability… DoorDash loses money acquiring each new customer in the first year. But after the first year, each customer begins to make a profit and even spends more in future years.
• The infamous network effect… When each additional user increases the overall value of its platform. For DoorDash — more consumers attracts more restaurants, which attracts more drivers on its app, which improves delivery times and finally, attracts more consumers.

What it’s not trying to sell you on is its international growth. While the company has gained a presence in Canada and Australia, US revenue still makes up 99.8% of its sales. Food delivery is a competitive space with established competitors in each country.

For investors… Not another Uber…

DoorDash really doesn’t want to be compared to Uber, whose stock has failed to meet investor expectations since it went public in 2019. Instead, losses grew and Uber continued to lose investor confidence.

Uber Eats, which makes up nearly half of Uber’s revenue, share similar problems with DoorDash — high competition, low profitability and harsh scrutiny from regulators.

DoorDash will have to deliver on its results to justify the high $32b valuation it expects to go public at.

(Learn more: Why should you wait 180 days before investing in an IPO?)