Cramer Gives Blessing To Buy DoorDash Shares, But Says Don't Chase Above This Price

CNBC "Mad Money" show host Jim Cramer said Monday he thinks DoorDash has a "terrific story" but investors should be cautious about investing in its stock following its initial public offering.

At the end of November, the food delivery company upvalued its IPO by $3 billion, raising the company valuation to $28 billion.

What Happened: Although Cramer is all praise for the company and holds a hawkish view on the IPO, he believes investors should be cautious when subscribing to an overpriced DoorDash stock.

“DoorDash is a terrific story, but its business could slow dramatically next year, so I recommend being careful with it.” Cramer remarked, saying that a stock price in excess of $100 is not worth chasing.

“If you can get it for $100 or less, you’ve got my blessing. Otherwise, sorry, you had to get in on the deal because you can’t chase these,” the former hedge fund manager said.
Why It Matters: According to a filing with the U.S. Securities and Exchange Commission on Monday, the California-based food delivery company will issue 33 million shares of Class A common stock in the price range of $90 to $95.

DoorDash broke even and generated its first non-GAAP profit of $433 million in the 9-months ended Sept. 30. Revenue for the 9-month period in 2020 increased close to three times compared to the same period one year ago.

The company anticipates that investments in growing the food delivery business, enhancing the technology platform, and expenses associated with operating as a public company could drive up costs in the future.

Some of DoorDash’s market rivals include Uber Technologies Inc’s (NYSE: UBER) Uber Eats and Postmates, as well as GrubHub Inc (NYSE: GRUB).