Breakingviews

Doximity shows there’s riches in niches

2 minute read

REUTERS/Regis Duvignau

Register now for FREE unlimited access to Reuters.com

NEW YORK, June 24 (Reuters Breakingviews) - Facebook (FB.O) dominates social networking with 2.9 billion monthly users, but Doximity (DOCS.N) and its $7 billion initial public offering shows there’s room for more specialist clubs. The network for doctors only has 1.8 million members, but that equates to four out of five U.S. physicians. Moreover, it’s highly profitable and hard to copy.

While Doximity makes some money from recruiters and telehealth, 80% of its revenue comes from ads paid by pharmaceutical firms and hospitals. Revenue increased 78% last year, and earnings rose about 70% to $50 million. The company thinks marketing by drugmakers is a $7.3 billion opportunity. Investors are counting on it capturing much more. After a more than 60% increase in its shares on Thursday, it was trading at over 100 times trailing 2020 earnings.

What it lacks in size, Doximity makes up for in barriers to entry. Laws on handling medical information, and verification of doctors means it will be hard for rivals like Microsoft’s (MSFT.O) LinkedIn to steal its business. Investors may therefore be wagering that at some point, they’ll buy it instead. That would make Doximity a bet on a future transplant. (By Robert Cyran)

Register now for FREE unlimited access to Reuters.com

On Twitter http://twitter.com/breakingviews

Capital Calls - More concise insights on global finance:

Deliveroo court win is mere amuse-bouche read more

Alzheimer’s incentives read more

NFL tries opportunistic stake-sale play read more

Bank of England loses a bulwark against groupthink read more

UK housebuilder may have hit haggling limit read more

Register now for FREE unlimited access to Reuters.com
Editing by John Foley and Oliver Taslic

Breakingviews
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

More from Reuters