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ParcelPal, the new ‘DoorDash Lite’

In an ongoing pandemic, its no surprise that DoorDash’s IPO reached a dizzying valuation of over $50 Billion! On Tuesday Dec. 8, the largest provider of food delivery services priced 33 million shares at $102 taking is pre-trading value to $37 million. By Wednesday, the free-trading DoorDash stock catapulted 85.8%, closing at $189.51— now that’s an impressive overnight delivery.  While your average investor would shy away from a near $200 stock, how about a near $0.15 stock that—at a much smaller scale in Canada—is equally well established and poised for a similar boost. That’s what quick thinking, savvy investors can find in Vancouver based ParcelPal (PKG.CA).

ParcelPal delivers anything from food, alcohol, groceries, flowers, pet supplies, your next phone to clothes, and even cannabis where permitted. To date the company has fulfilled deliveries of 5 million and counting.

Besides the obvious size and scale difference—DASH’s current valuation of $50 billion versus PKG at $10 million—unlike Doordash, ParcelPal is now profitable! Consider that DoorDash shares rose about 85% on its first day of trading on the NYSE last Wednesday. While the stock has lost about 14% since its debut day, DoorDash’s market cap still sits above $50 billion. The company has lost $149 million through the first nine months of 2020. To fuel the fire the company announced on Dec. 17 it secured at CAD $5m equity line of credit.  CEO Rich Wheeless said, “This equity line facility provides the Company with a viable long-term platform to both grow its existing operations, develop other business activities under current consideration, and expansion into new areas as well as potential acquisitions.”

Meanwhile PKG announced Dec. 8 that November was the second quarter of profitability since its inception in 2015. Clearly continuing its momentum latest quarterly news release ending Sept. 30:

‘In Q3 2020, ParcelPal continued its operating growth, which was driven by revenue growth of approximately 13% to approximately $1,466,528 (up from $1,299,275 in Q3 2019), which is a record revenue high for Q3 since inception of the Company. Revenue growth has been driven by our business expansion, in which we continue to sign and retain higher margin customer agreements, ramping up our staffing levels to meet the increase in business, increasing our focus on client diversification, and expanding into new markets. Some highlights of the third quarter include both an increase in our business with Amazon, as well as continued diversification of our customer base and into other areas driven by home meal kits and large retail store chain deliveries.’

ParcelPal has struggled through early stage growing pains but now it’s looking as if the time is ripe for PKG.  As chart-maker Clive Maude, who’s been following this stock in the last year or so succinctly put it:

“ParcelPal is a company whose time has come as it is a home delivery company-and it delivers a lot more than just parcels, including food.  This high volume surge about a week ago is believe to been sparked by the great success of DoorDash’s IPO.” …Given what it is doing it is rather surprising that the stock didn’t break out sooner, and the reason for this is that it struggled to achieve profitability.”

Source: Clive Maude, www.clivemaund.com/

It now looks a though those struggles are behind PKG.C and the company is is on a solid trajectory of growth. If the 2020 year end projection hold the company is only trading at 1.75X revenue, even after the DoorDash pick-me-upper last week.

Source: ParcelPal Presentation

Meanwhile with a solid new CEO in place, it looks like accelerating top-line growth and profitability is here to stay with solid momentum:

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Source: ParcelPal Presentation

The company’s timing and momentum has also won fans on popular YouTube on channels such as Next Millionaire Maker.

Much of the company’s continued success could be attributed to CEO Rich Wheeless, who was promoted last April from his position as CFO. Before ParcelPal, Wheeless was most recently the CFO of Taal Distributed Information Technologies Inc. Prior to that, he was the Chief Financial Officer for the security software company Rivetz, Inc. Before that, he was the CFO of LaunchKey, Inc. and the CFO of Pilus Energy, which were both acquired by publicly traded companies. Wheeless, an MBA with a BSc., has also held managerial posts at Johnson and Johnson as well as Cardinal Health, both Fortune 30 companies. He originally started his career in the private equity division at Citigroup, another Fortune 30 company.

So what makes ParcelPal service so special?

The company created a slick app with supporting technology which enables businesses to provide on-demand delivery to their customers who have fulfilled over 5 million deliveries to date. Consumers have instant access to the goods they want on demand. Its verticals include food, alcohol, cannabis (medical & recreational), groceries and more. Customers includes such well known brands as Goodfoods, Shopify, London Drugs and Amazon.

According to the company’s presentation, ParcelPal boast the ability to order “ANYTHING, ANYWHERE!”

Something it achieves with end-to-end GPS tracking and dynamic ETA updates

a user-friendly interface across all retailers on the platform with in-app customer service enabled, as well as in-app payment and tipping.

ParcelPal’s staple services include:

Scheduled Same Day Courier Services with 24 hours notice: delivered by the end of the next business day

Overnight Courier – Next-Day Service package is delivered the next day (provided the order is placed by 4pm). Delivered by 5pm, the next day.

Same Day Express Courier – Delivered within 4 hours from the time the order is placed

Hotshot – Door to Door Courier Services picked up and delivered within 1-3 hours from the time the order is placed

Strategy for growth is that the company continues to expand into larger Tier 1 and Tier 2 Canadian and US cities and to grow organically in geographies where they currently operate including Vancouver, Calgary, Edmonton, and Toronto. The company seeks to expand its revenue diversification through large e-commerce contracts (Amazon, subscription delivery, large retail), cannabis delivery (Aphria, Choom, Kiaro) and potential acquisitions, vertical and/or horizontal.

Technically, they’re Integrating artificial intelligence and prediction algorithms into their platform to maximize revenue potential and customer satisfaction through streamlined service. All of this has led to improved margins and profitability as the company has achieved its goal of becoming cash flow positive business by the end of 2020.

You could say ParcelPal has created itself to emerge at this this point in history: where restaurants are struggling at half capacity or less, shops are limiting their in-store activity, and people are avoiding transit and shopping malls. If the world likes an unprofitable DoorDash so much, why wouldn’t they love a profitable ParcelPal.

_______

Disclosure:

  • Knox Henderson I, or members of my immediate household or family, own shares of the following companies mentioned in this article: none. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: none. My company has a financial relationship with the following companies mentioned in this article: none. I determined which companies would be included in this article based on my research and understanding of the sector.
  • The authors quoted in this article including Clive Maude, Brian Benjamin or members of their immediate households or families, own shares of the following companies mentioned in this article: none. They personally are, or members of their immediate households or family are, paid by the following companies mentioned in this article: none. Their companies have a financial relationship with the following companies mentioned in this article: none. I, Knox Henderson determined which companies would be included in this article based on my research and understanding of the sector.

Written By

Knox Henderson is a journalist and capital markets communications consultant. He has advised for a broad range of small cap companies in the resource, life sciences and technology sectors for more than 25 years.

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