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DoorDash Races Higher in IPO. What Jim Cramer and Others See Ahead

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DoorDash shares are dashing higher on the company's first official trading day.

The food delivery giant went public to huge fanfare on Wednesday, with its stock surging nearly 86% to close at $189.51 per share.

"Right now, the time is really to invest," DoorDash CEO Tony Xu told CNBC in an exclusive interview on Wednesday. "We're playing in one of the biggest yet still most underpenetrated categories in the world."

Here's what four market analysts, including CNBC's Jim Cramer, said about DoorDash's debut:

Rohit Kulkarni, an analyst at MKM Partners, saw a "three-horse race" unfolding in the food delivery business:

"What we are seeing with food delivery is the last frontier of e-commerce, I think. It's the perfect thing for e-commerce players to come in and aggregate the demand. And DoorDash is right there. We are entering winter. Literally, winter is coming for restaurants. We have cold weather, no indoor dining, no vaccine in sight. I think DoorDash continues to play out and once you do that for many, many months, I feel it's going to change consumer behavior and that is going to last. That's going to help DoorDash here. … It's a competitive environment that's level set right now. There's Uber, there's possibly Instacart coming, which is going to go public in the next, call it, three to six months, and then there's DoorDash. So, Big Tech is not going to come in and try to swoop in on food delivery or grocery delivery. So, what it means is [a] competitive environment, three-horse race. The profitability of the industry is going to rise, and even in a smaller consumer behavior market, I think all three can win."

Cramer, host of "Mad Money," hoped investors wouldn't forget their discipline with this IPO:

"I think that there are a couple things that are going in favor of it. There are people who know the brand. When people know the brand, the younger investors just say, 'You know what? Get me some.' I don't want them to lose what discipline they have because then we're starting to get into a 1998-1999 period where they put market orders in and whatever price you get may end up being the top price for the day. What I do think is important is people recognize that they're going to have easy comparisons for a little bit, but then when people can start going out again, they will choose to go out as much as they will use DoorDash. I don't think DoorDash goes away. I think that it's more of a duopoly than it's been before because of UberEats. Good business. Great business? I don't know. It is still a delivery system. They've made a suburban footprint, which is really brilliant. But … in the end, we know that the moat is only as good as the fact that they have low prices and they've got good technology."

Tom White, managing director and senior research analyst at D.A. Davidson, pointed to what he saw as key catalysts for the company:

"When we get a widely deployed vaccine, we do expect competitive intensity to tick up here. I'd point to a couple things, though, that we think point to these guys being able to gradually improve profitability and probably get to 20%-plus EBITDA margins here in a reasonable time frame. One, the cohort data … really sort of underpins, we think, that road map. In a lot of that cohort data, we were seeing the trends even pre-pandemic. So, the pandemic sort of supercharged things for DoorDash, but a lot of those trends were established pre-pandemic. Secondly, we've seen a fair bit of consolidating M&A in this space recently. So, Postmates was scooped up by Uber. You've had a merging of Just Eat and GrubHub. And thirdly, we think, actually, just the act of DoorDash going public is going to be an important catalyst as well."

Virtus Investment Partners' senior managing director, Joe Terranova, flagged an unusual market dynamic that occurred in Wednesday's trade:

"There's a very interesting market internal that's occurring right now. So, as money is obviously going into DoorDash, you could pull up these five stocks — Peloton, CrowdStrike, Cloudflare, DocuSign and Zoom Video — money's clearly coming out of those momentum-type names right now as we speak. I don't know if it's going directly into DASH, but that's fascinating to me that such a successful IPO for an emerging growth company, and on the other side of that, you're witnessing what was clearly the stellar emerging growth companies declining precipitously as that's opening."

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