How investors are valuing the pandemic – TechCrunch

by Joseph K. Clark

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch but free and made for your weekend reading. Want it in your inbox every Saturday morning? Sign up here.

Ready? Let’s talk money, startups, and spicy IPO rumors.

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Kicking off with a tiny bit of housekeeping: Equity is now doing more stuff. And TechCrunch has its Justice and Early-Stage events coming up. I am interviewing the CRO of Zoom for the latter. And The Exchange itself has some long-overdue stuff coming next week, including $50M and $100M ARR updates (Druva, etc.), a peek at consumption-based pricing vs. traditional SaaS models (featuring Fastly, Appian, BigCommerce CEOs, etc.), and more. Woo! 

This week both DoorDash and Airbnb reported earnings for the first time as public companies, marking their actual graduation into the ranks of the exited unicorns. We’re keeping our routine eye on the earnings cycle quietly, but today we have some learnings for the startup world.

Some basics will help us get started. DoorDash beat growth expectations in Q4, reporting revenue of $970 million versus an expected $938 million. The gap between the two likely comes partially from how new the DoorDash stock is and the pandemic making it challenging to forecast. Despite the excessive growth, DoorDash shares initially fell sharply after the report, though they largely recovered on Friday.

Why the initial dip? I reckon the company’s net loss was more considerable than investors hoped — though a large GAAP deficit is standard for first quarters post-debut. That concern might have been tempered by the company’s earnings call, which included a note from the company’s CFO that it is “seeing an acceleration in January relative to our order growth in December as well as in Q4.” That’s encouraging. On the flip side, the company’s CFO did say, “starting from Q2 onwards, we’re going to see a reversion toward pre-COVID behavior within the customer base.”

Takeaway: Big companies are anticipating a return to pre-COVID behavior, just not quite yet. Firms that benefited from COVID-19 are being heavily scrutinized. And they expect tailwinds to fade as the year progresses.

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