DoorDash (DASH) Opening Print Could Offer Profitable Trades

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DoorDash (DASH) Opening Print Could Offer Profitable Trades

At 12:43 p.m., DoorDash Inc. (DASH) began trading on the NYSE. On Wednesday, December 9, the stock goes public at $182. The IPO initially priced at $102, but strong demand prompted lead underwriters The Goldman Sachs Group, Inc. (GS) and JPMorgan Chase & Co. (JPM) to raise the price. On a revenue basis, the closing of $189.51 equates into a market value of $60.2 billion, or about double that of competitor Uber Technologies, Inc. (UBER).

Key Takeaways

  • DoorDash came public at $182 on Wednesday and closed at $189.51.
  • The IPO opening print can be used to define support or resistance, depending on short-term momentum.
  • This magnetic price level can come into play months or years after a company comes public.

In the first nine months of 2020, the firm made $1.9 billion in sales, more than tripling the $587 million earned in the same time in 2019. It reported a net loss of $149 million, substantially lower than last year’s loss of $533 million, demonstrating strong growth that might lead to profitability ahead of Uber, which predicts that lucky event for the end of 2021. Softbank Group Corp. (SFTBY) of Japan has the most shares following the IPO, with a 20% ownership.

Public traders are captivated by highly anticipated IPOs, looking for shares that are difficult to get since they are reserved for staff and insiders. When a firm goes public, it is often overvalued by the time it is listed on the stock exchange, resulting in losses for market participants who lack sophisticated risk-management abilities. Furthermore, the first publicly traded session is sometimes the worst moment to invest since there is no technical data to depend on.

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A traditional approach is to draw a line across the IPO opening print and monitor short-term price behavior in relation to this reference point. It doesn’t always work since some stocks suddenly drop or take off for the sky, and they don’t trade close to the print for months. This level, on the other hand, is often utilized to establish support and resistance levels that may be used for lucrative entrance and exit. In this respect, Twitter, Inc. (TWTR) comes to mind, having regularly crossed the November 2013 print of $45.10 during the preceding seven years.

An initial public offering (IPO) is the process of selling shares of a private firm to the general public in the form of a new stock issue. A firm may obtain funds from public investors by issuing public shares. Because it often involves share premiums for existing private investors, the transition from a private to a public firm may be an essential opportunity for private investors to completely realize rewards from their investment. Meanwhile, public investors are permitted to participate in the offering.

DoorDash 1-Minute Chart (2020)

TradingView.com

Begin with a one-minute chart and progress to a daily chart in the days and weeks after a company’s IPO. The shares of DoorDash started at $182 on Wednesday, despite the fact that several charting systems display $163.80 as the intraday low. Draw a horizontal line over the IPO starting print, then add lines at the high and low after the closure. Then, as required, widen the highs and lows, seeking for the print to function as support, resistance, or a pivot point.

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The opening print came into play during the first session, producing resistance for more than two hours after a 1:30 p.m. collapse. The last hour breakthrough is being challenged in Thursday’s pre-market, with price settling around the print, providing theoretical support until the opening bell. Extend this method and thinking process throughout the following several days, weeks, or months, finally working with daily price bars.

A pivot point is a technical analysis indication or calculation used to assess the market’s overall trend across various time periods.

The Bottom Line

On Wednesday, DoorDash shares went public at $182, compelling traders and investors to use a few technical methods if they want to get in before market activity creates larger-scale buy or sell signals.

Disclosure: At the time of publishing, the author had no investments in the aforementioned securities.

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