Shelter-in-place restrictions have delivery services companies riding a wave of demand ahead of planned 2020 IPOs. Leading the pack is China's Dada Nexus (DADA).
This week Dada Nexus filed for a US IPO that we estimate could raise up to $500 million. Privately valued at about $3.5 billion by strategic investors JD.com and Walmart, the company operates leading local on-demand retail and delivery platforms JD-Daojia and Dada Now, facilitating 822 million deliveries in the past year, including groceries, retail goods, and meals. Founded in 2014, it competes with Meituan, Alibaba’s Ele.me, SF Rush, and Dingdong Maicai, the last of which raised $300 million privately this week. Dada’s revenue rose 61% to $438 million in 2019, before growth accelerated to 109% in the 1Q20, partly due to coronavirus-fueled demand. Its gross margin only turned positive in fiscal 2019 (8%), while high S&M expenses resulted in a -48% EBITDA margin, leaving it an accumulated deficit of more than $1 billion.
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