DoorDash (NYSE:DASH) has been a public company for 14 trading days since its initial public offering on Dec. 8. On its first day of trading, DoorDash stock gained almost 86%, closing pennies under $190.
In the 13 days since, it’s lost ground on 10 occasions. Down 28% from its first day high of $195.50, you might want to consider a Canadian alternative before buying DoorDash’s two-week dip.
Who Is Facedrive?
Facedrive (OTCMKTS:FDVRF) company has a total of five verticals: Facedrive Rideshare (ridesharing), Facedrive Marketplace (sustainable e-commerce platform), Facedrive Foods (food delivery), Facedrive Social (e-social platform), and Facedrive Health (contact tracing and health services).
That’s a lot of businesses for a company that doesn’t have much revenue. Needless to say, plunking any money down on Facedrive stock is a riskier proposition than buying inflated shares of DoorDash.
That said, I do find its Steer electric vehicle subscription business, which it acquired in September 2020 for $3.5 million of its shares, interesting. Facedrive acquired the business from an affiliate of Exelon (NASDAQ:EXC), the Chicago-based utility. As part of the deal, the Exelon affiliate made a $2 million strategic investment in Facedrive.
This business has many moving parts, so you might want to wait a few quarters to see which of the five verticals seem to stick.
Is Facedrive Cheaper Than DoorDash Stock?
I’ll be the first to admit that I had never heard about the Toronto-based ridesharing company until I saw an article in Oilprice.com discussing why DoorDash was the hottest IPO of 2020.
Thanks to Oilprice.com contributor Paul Fisher for the tip on Facedrive.
As someone who loves to point out different options for InvestorPlace readers, I couldn’t resist taking a closer look at the Canadian company that’s been on an acquisition binge in 2020.
According to the company’s Q3 2020 Management Discussion and Analysis from Nov. 27, Facedrive acquired certain Foodora Canada assets out of bankruptcy in July for 562,000 CAD ($438,360). In October, it acquired Food Hwy, Canada’s leading ethnic and student-focused food-delivery service, for 1.5 million CAD ($1.17 million) in cash and 7.6 million CAD ($5.93 million) in Facedrive stock.
While it’s been swamped acquiring other businesses, investors shouldn’t confuse Facedrive with DoorDash in terms of sales.
In the first nine months of 2020, DoorDash had $1.92 billion in sales, almost four times higher than a year earlier. By comparison, Facedrive had 748 million CAD ($585 million) in its first nine months through the end of September.
InvestorPlace’s Larry Ramer recently pointed out that DoorDash was trading more than 10 times the analysts’ 2021 sales estimate. That was based on a market capitalization of $51 billion. At the current market cap of $44.5 billion, it’s got a price-to-sales ratio of 8.7, slightly less expensive, but still not cheap.
Ramer points out that both GrubHub (NYSE:GRUB) and Postmates have been acquired in recent deals that valued the businesses between 4-5 times sales. So, yes, DoorDash isn’t cheap.
As for Facedrive’s Q3 2020 financial statements at Sedar, the company had 91.4 million shares outstanding at the end of September. Based on a share price of $13 as I write this, it has a market cap of $1.19 billion and a P/S ratio of 1,500 based on trailing 12-month sales of 980,000 CAD ($764,000).
The short answer is that Facedrive is not cheaper than DoorDash, but they both lose a boatload of money.
The Bottom Line
If I were going to invest in a money-losing large-cap stock, DoorDash would definitely not be it. I don’t care what the future looks like for food-delivery services.
As for Facedrive, it doesn’t appear to know what it wants to be when it grows up, and that means your investment is going to be severely diluted in the future as it continues to sell stock to finance its grand plan to provide services that bring about a healthier planet.
If I had a few thousand dollars in fun money to play with, Facedrive, despite its obvious lack of any real revenues, is an intriguing stock to play. You might want to put it on your “Fun Money” watchlist.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.