DoorDash, the largest food delivery company in the United States, said on Thursday that it had raised another $400 million in a new round of funding, valuing the company at $16 billion.
The cash infusion comes after months of growing demand for DoorDash’s services while restaurants are closed and people are staying home during the coronavirus pandemic.
The company was expected to go public this year after filing registration documents in February. But initial public offerings slowed as the markets became volatile, and DoorDash has focused on responding to the flood of demand.
The company faces challenges as it prepares to go public. It is not profitable and food delivery remains competitive. Its largest rivals, Grubhub and Uber Eats, held merger discussions, with Grubhub eventually agreeing to sell to Just Eat Takeaway, a European food delivery service, for $7.3 billion in June.
Restaurants are struggling to make ends meet on delivery apps, which charge fees for their services and sometimes list restaurants that have not signed up. In April, DoorDash cut its primary fees for independent restaurants during the pandemic, which it said cost it around $120 million.
The company also faces pushback from regulators and workers. California has required “on-demand” tech companies to classify their armies of gig workers as employees. This week, San Francisco’s district attorney sued DoorDash for unfair business practices, seeking an injunction requiring the company to comply with California’s worker classification law.
Fidelity and Durable Capital Partners led the $400 million round. DoorDash, based in San Francisco, has raised $2.3 billion since it was founded in 2013.
Unemployment claims top one million for the 13th straight week.
Businesses are reopening, but the layoffs won’t quit.
Another 1.5 million people applied for state unemployment benefits last week, the Labor Department said Thursday.
It was the 13th straight week that state filings topped one million. Until the coronavirus crisis, the most new claims in a single week had been 695,000, in 1982.
Claims for Pandemic Unemployment Assistance, a federal program for self-employed workers, independent contractors and others ineligible for standard benefits, added 760,000 to the total.
“It’s a sustained hemorrhaging of jobs unlike anything we’ve seen,” said Heidi Shierholz, director of policy at the Economic Policy Institute, a progressive think tank.
Economists said recent layoffs, though smaller than the wave in March and early April, suggested that the crisis was reaching deeper into the economy.
Hilton Worldwide, the hotel operator, said this week that it was eliminating 2,100 corporate jobs globally and would extend previous furloughs and cuts in hours and wages for 90 days. AT&T disclosed plans to shed 3,400 technician and clerical jobs nationwide and permanently close more than 250 stores, according to one of its unions. The gym chain 24 Hour Fitness said it was filing for bankruptcy protection and would permanently close more than 100 locations.
More than 40 percent of black business owners reported they were not working in April, when businesses were feeling the worst of the pandemic’s economic consequences. Only 17 percent of white small-business owners said the same, according to an analysis of government data by Robert Fairlie of the University of California, Santa Cruz.
Many small businesses are struggling during the pandemic because they lack easy access to loans and cannot easily move their businesses online. Black-owned businesses tend to have fewer employees than other small businesses. They are also more likely to be in industries like restaurants or retail that lockdowns have hit especially hard, said Ken Harris, president of the National Business League, an organization founded by Booker T. Washington in 1900.
“Most lack the capacity, scale and technical assistance needed to survive a pandemic,” Mr. Harris said.
Black-owned businesses also appear to be benefiting less from federal stimulus programs. Only 12 percent of black and Hispanic business owners polled from April 30 to May 12 received the funding they had requested. About one quarter received some funding. By contrast, half of all small businesses reported receiving from a single part of the stimulus packages — the Paycheck Protection Program — according to a census survey.
“Black businesses often don’t have a traditional banking partner,” Mr. Harris said. Without such a partner, many had trouble applying for assistance.
How some hedge funds may have contributed to market ruptures in March.
When financial markets were melting down in March, one theory for the disruption was that some hedge funds were dumping government debt and making the collapse worse.
It turns out, that theory could be right. On Thursday, the Federal Reserve released a quarterly survey of Wall Street firms that included questions about what happened in March.
Several relative-value hedge funds had reportedly been using a trading strategy called a basis trade when market turmoil struck. The approach involved holding portfolios of Treasuries, and when the market for government debt turned dicey, the volatility made them riskier. The funds were said to have closed out their positions — dumping bonds into an already-saturated market.
About a third of respondents said that they offered such hedge funds less funding collateralized by Treasuries in mid-March, either because they had reassessed the hedge funds’ financial strength, they had less room on their own balance sheets, or as a result of changes in Treasury market functioning and uncertainty.
About half said that the hedge funds had shown “somewhat” or “significantly” higher demand for funding collateralized by Treasury securities, the survey found. The hedge funds attributed that to increased trading opportunities and changes in Treasury market liquidity and functioning.
The Fed also asked about reports that dislocations in the market for mortgage-backed securities from agencies like Fannie Mae and Freddie Mac came amid margin calls and forced selling by mortgage real estate investment trusts, which allow investors to earn interest off real estate-tied debt. Credit officers almost uniformly reported that lending to such REITs dropped off in mid-March, and about half said that came as the availability of such lending decreased.
As small businesses reopen, owners are figuring it out as they go.
With capacity limited and demand uncertain, small-business owners say it’s hard to know whether to spend the money to reopen now or to wait.
With no revenue for months, small businesses must find ways to pay for the new sanitation regimens, thermometers, plexiglass, masks and other items necessary to open, without knowing whether customers will return.
“None of the relief packages have included specific funding for safety retrofitting, purchasing of safety equipment or even helping business getting a handle on uniform P.P.E. for employees and customers,” said Amanda Ballantyne, executive director of the Main Street Alliance, an advocacy group for small business.
Some businesses are taking a slow approach. At first, Chris Lynch and Michael Samer weren’t sure what to do about their ocean adventure tours business, Everyday California, when they got the go-ahead in late April.
Mr. Lynch and Mr. Samer decided to reopen with curbside kayak and surf rentals only, keeping their retail shop and tour business closed. Then, as they felt more comfortable, they reintroduced tours at a 50 percent capacity with everyone wearing a mask. They also invested in their neglected online shop.
The bet paid off: They increased what had been a small number of online merchandise sales by 750 percent in May, allowing them to bring back about 20 employees to help with shipping and marketing.
Wall Street faced another day of unsteady trading on Thursday, with stocks drifting between negative and positive territory as investors considered new data on unemployment claims and the latest reports on fresh coronavirus outbreaks.
The S&P 500 was flat, after having started the day with a decline. European stocks were slightly lower.
Concerns about a rise in new coronavirus cases around the world have collided with expectations for a quick economic recovery in recent days, and markets have become somewhat directionless as a result. It’s a consolidation that many Wall Street analysts have described as long overdue, after the S&P 500 ripped higher with a string of gains from late March to early June.
But it also reflects growing uncertainty about the economic picture going forward.
Another 1.5 million U.S. workers applied for state unemployment benefits last week, a report released Thursday by the Labor Department showed. Not all the unemployment claims necessarily reflect new layoffs. Some states are still working through backlogs of claims filed earlier in the crisis; in other cases, people filing under multiple programs may be counted twice.
But three months into the crisis, there is little doubt that layoffs remain elevated. Economists warn that job losses could worsen if government support that has helped prop up the economy is allowed to lapse too soon.
Many people are in the position of needing help they never imagined would be necessary. Ron Lieber and Tara Siegel Bernard created a guide to connect you with information about government benefits, free services and financial strategies to get you through this crisis.
If you need temporary relief on your credit card or auto loan payments, many lenders are offering at least some help. Start with the website for your lenders and read what they have posted. Some have made their policies more stingy since Ron first reported on changes in March.
If you call for help via phone, record the conversation if you can or at least get written documentation of any changes the lender agrees to. This column from Ron explains how and why. And be sure to ask how any change might affect your credit score.
Financial losses often come with emotional strain, at the very point when people may be least likely to spend money on care for themselves. If you are in severe distress, the number for the National Suicide Prevention Hotline is 1-800-273-8255. Or text HELLO to 741741.
The National Alliance on Mental Illness maintains a help line that can provide referrals to local resources as well. Its number is 1-800-950-6264.
China aims to speed up an infusion of credit into its economy this year as it tries to restart growth after coronavirus the outbreak.
The authorities saw total social financing — a broad measure of credit in the Chinese economy — rising to more than 30 trillion renminbi, about $4.24 trillion, this year, Yi Gang, the governor of the People’s Bank of China, said Thursday the annual Lujiazui Forum in Shanghai. That would be more than $600 billion above the 2019 level.
The Chinese economy has rebounded by some measures since the lockdowns in the first part of the year, but officials have acknowledged that joblessness remains a big problem.
Yet China’s moves show caution. In the United States, the Federal Reserve said in April that it would free up more than $2 trillion. Chinese officials have been wary about a big lending splurge after their response to the 2008 global financial crisis layered the economy with debt. Mr. Yi said officials would “moderate the total amount and consider the timely withdrawal of policy tools in advance.”
The Fed played an unofficial role as the world’s central bank and would put the U.S. dollar and financial system at risk if it unleashed too much credit, Guo Shuqing, the chairman of the China Banking and Insurance Regulatory Commission, said in a speech.
He warned that quickly rising stock markets might be harmful and unsustainable without real economic recovery. He did not specify the market, but global stocks have risen sharply from their earlier lows in part because many governments have rolled out big plans to spend money to get the economy humming again.
All countries and regions need to examine whether stimulus policies might be going too far, Mr. Guo said, noting the problems that can be created with too much credit. When stimulus efforts begin, “everyone rejoices,” he said. “When exiting, it may be very painful.”
Taubman Centers, the shopping mall owner that agreed to be acquired by Simon Property Group for $3.6 billion this year, is pushing back on Simon Property’s attempt to terminate the deal based on the pandemic.
Simon Property was experiencing “a classic case of buyer’s remorse” and the companies had “contracted to allocate the risk of global pandemics to the Simon parties, knowing full well that there was a pandemic raging in the world,” Taubman said in court filings on Wednesday. Taubman, which owns 24 high-end malls including the Mall at Short Hills in New Jersey, said that Simon Property had already negotiated a lower purchase price for the company based on an uncertain retail environment, which was shaky in part because of the coronavirus.
Simon Property, the biggest mall operator in the United States, said last week that the pandemic “had a uniquely material and disproportionate effect on Taubman” compared to other retail real estate companies, pointing to its high proportion of indoor malls versus open-air strip centers. It also faulted Taubman for failing to mitigate the impact of the pandemic by “not making essential cuts in operating expenses and capital expenditures.”
Taubman said on Wednesday that Simon Property’s comparison was flawed, noting that its malls were “hardly in the same industry” as strip centers, and that they did not have grocery stores or anchors like Home Depot or Target. The company also said that Simon Property was kept informed about its actions in response to the pandemic.
Catch up: Here’s what else is happening.
McDonald’s said it was expecting to hire about 260,000 restaurant employees this summer as states reopen their economies and the company welcomes customers back to its dining rooms. To protect workers and customers, the company said that it put into place nearly 50 new safety procedures, including temperature checks for employees, protective barriers for ordering and social-distancing stickers on the floor. “We want candidates and their families to know we have one goal — to keep our people safe,” said Joe Erlinger, president of McDonald’s USA.
The Bank of England said Thursday that it would hold interest rates steady at 0.1 percent but increase its purchases of British government bonds by 100 billion pounds, or about $125 billion, as it tries to help shore up the economy.
Kroger, the grocer with about 2,800 stores in 35 states, said Thursday that its sales increased to $42 billion in the quarter that ended May 23, up from $37 billion in the same period last year. Digital sales jumped 92 percent during the period marked by pandemic shutdowns. The company, which has about 500,000 employees, said it had hired 100,000 workers.
Carnival Corporation, the giant cruise company, reported Thursday that it lost $2.4 billion in the three months that ended on May 31. Carnival, which offered refunds or credits for future cruises to passengers whose voyages were canceled by the pandemic, said that about half asked for their money back. Customer demand for 2021 was increasing, it said, with about two-thirds of bookings in a recent six-week period coming fresh and one-third from customers using credits. Carnival said it could not say when it would return to normal operations.
Chanel said it expected a “significant” reduction in sales and profitability for 2020, the latest luxury business to warn on the serious hit to the sector caused by the coronavirus pandemic. On Thursday, Chanel’s global chief financial officer, Philippe Blondiaux, said the company had reopened 85 percent of its global boutiques and recorded a “double or even triple digit recovery in sales” in markets like China and India.
Reporting and research were contributed by Ben Casselman, Tiffany Hsu, Coral Yang, Sapna Maheshwari, Mohammed Hadi, Amy Haimerl, Jeanna Smialek, Lauren Leatherby, Ron Lieber, Tara Siegel Bernard, Elizabeth Paton, Stacy Cowley, Jeff Sommer, Stanley Reed, Carlos Tejada and Gregory Schmidt.