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DoorDash to Show Narrower Annual Loss as Growth Continues

Onward and upward for the food-delivery service.
(Sundry Photography)
(Sundry Photography)
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“DoorDash Inc.’s first results as a public company are expected to show the food-delivery app growing at a blistering pace while trimming its yearly loss,” WSJ writes.

Numbers To Consider:

  1. Q4 revenue is expected to more than triple to $938 million.
  2. Analysts project full-year revenue in 2020 to rise to $2.85 billion from $885 million.
  3. DoorDash’s full-year loss is expected to shrink from $667 million a year earlier to $318 million.
  4. The company’s Q4 loss is projected to extend from $134 million in the year-before period to $153 million.
  5. DoorDash’s sales and marketing costs increased 34% year-over-year to $900 million.

Why It Matters: DoorDash hit the public markets in December, joining Airbnb in a monstrous debut. Since then, DoorDash’s shares have increased by 73% from its IPO price. With a market cap of $56 billion, it’s currently more valuable than Chipotle and Domino’s. This all comes at a time where “consumers are more reliant on food-delivery services than ever before” due to shifting stay-at-home pandemic trends.

Crushing The Competition: DoorDash has exploded past UberEats and Grubhub and commanded almost half of the U.S. food-delivery market in October, an improvement from about a third of the market a year earlier.

  • Monthly subscribers have more than tripled from January to September.

Meanwhile: Some food establishments are “pushing back against the high fees that food-delivery apps can charge—up to 30% of an order—by driving more orders toward their websites and putting idle staff on delivery duty.”

  • Regulators in multiple cities have capped app fees in an attempt to mediate costs for restaurants.
  • DoorDash has said, “it spent millions of dollars to support small restaurants through grants and free marketing during the pandemic.”

Justin Oh:

DoorDash ($DASH) is growing at crazy growth rates, essentially tripling revenues compared to 2019. It also carries respectable 55% Gross Margins and is EBITDA profitable. 

As far as valuation goes, $DASH is trading for 28x expected 2021 Gross Profit, which is actually very reasonable for how fast the company is growing. The only overhang on the stock is the question of what happens to revenue growth as vaccines are distributed and folks order food delivery less.

Long-term, I believe DoorDash is actually a pretty interesting investment, depending on if you think delivery apps will continue to grow post-pandemic.

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