Dingdong IPO everything you need to know about Dingdong

What we know about the Dingdong IPO?

Dingdong Maicai filed for a US IPO on June 8 2021. The flotation could see the company raise around $500 million, with the business reportedly targeting a valuation in excess of $6 billion.

It is unclear when the listing will take place, but sources have suggested the end of June.

Check out more IPOs for 2021.

What does Dingdong do?

Dingdong Maicai is a Shanghai-based groceries app, enabling its customers to order on-demand fresh goods via a network of ‘front warehouses’. These premises are strategically located close to residential areas to enable the company to provide a 30-minute delivery guarantee. Its service currently covers major Chinese cities such as Shanghai, Beijing, Shenzhen, and Hangzhou.

The company was founded in 2017 by serial entrepreneur Liang Changlin and attracted venture capital funding from the likes of Sequoia China and Qiming Ventures, with other stakes owned by Tiger Global Management, Gaorong Capital, Fortune Capital and more. Dingdong moved quickly to triple the number of its distribution centres to 345 in seven months.

By February 2020, Dingdong reportedly processed around 300,000 orders daily during the coronavirus outbreak in Shanghai, and the year’s revenue figures totalled some $1.7 billion. As of January 2021, it had opened groups in nearly 30 cities across the country, with about 1,000 warehouses, and counts around 6.9 million customers as its monthly userbase.

The company’s closest rivals in the space include Alibaba-backed Hema, Meituan Maicai, Tencent-backed Missfresh, and JD Daojia. Internationally, US-based Instacart is operating a similar model.

How does Dingdong make money?

Dingdong makes money through the sale of groceries through the app. Currently, this figure is not sufficient to turn a profit, leading some commentators to question the efficacy of the ‘distributed mini warehouse’ or DMV model, a term used to encapsulate the blending of storage and distribution employed by Dingdong and its rivals.

What is Dingdong's business strategy?

Dingdong’s approach makes full use of big data, employing proprietary data models to enable the company to predict future orders and customer habits.

The company’s business strategy, following a potential IPO, will likely be to increase market penetration in the regions it currently services as well as expand into new territories. The company has indicated that a proportion of the funds will be put towards upstream procurement capabilities, with further investment in its retail cloud business, including R&D.

After it raised $700 million in April 2021, Dingdong set out to improve its supply chains, with a large portion of prior spending going towards advertising and front warehouse capacity.

Is Dingdong profitable?

Dingdong is not profitable as yet, and the company’s sector is a notoriously tough environment to grow margins. For example, the order fulfilment outlay for Dingdong, encompassing delivery partner fees, packaging, and miscellaneous logistics costs, reportedly amounted to around two times net revenue per order for 2020. There may be concerns among would-be investors that order volume growth may not be sufficient to increase profitability any time soon, and so controlling burn rate for companies using the front warehouse model is a talking point.

For comparison, US grocery delivery operator Instacart was reportedly losing $25 million a month several years into the company’s journey.

How much is Dingdong worth?

It is hard to say how much Dingdong is worth in advance of its planned IPO, as it does not disclose information regarding its funding rounds, and financials are also tricky to come by. However, as mentioned above, the company may be looking to target a valuation of around $6 billion for the IPO.

Who owns Dingdong?

DiDi’s ownership is split between a variety of shareholders, including Changlin at around 30% and a range of financiers as mentioned above, with Internet Fund V Pte. Ltd. owning a 5.7% stake and General Atlantic Singapore DD Pte. Ltd and SVF II Cortex Subco (DE) LLC owning 5.6% of the company.

According to Crunchbase, 22 investors have a stake in the company, with the most recent raises led by SoftBank Investment Advisers in May 2021 and DST Global in April 2021. Funding has been achieved over seven rounds so far, to the tune of $1.3 billion.

Key personnel at Dingdong

DiDi has a number of key personnel that have helped progress the company to its expected IPO valuation. Here are some of them.

Position	Name
Founder and CEO	Liang Changlin
CTO	Xu Jiang
CSO	Joy Yu

How to trade top stocks

Open an account with us, or log in if you’re already a customer
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.