Urbanization, Mobile Adoption And Logistics Automation Will Unlock New Markets

Key Takeaways

• The acquisition of Deliveroo and DashPass expansion across verticals and regions could unlock stronger revenue growth, margin gains, and customer value than currently forecast.
  
• Investments in logistics automation and local commerce integration position DoorDash for durable cost efficiencies and the creation of high-margin revenue streams in an expanding market.
  
• Regulatory, labor, competition, and international expansion risks threaten DoorDash's margins, profitability, and growth prospects amid uncertain performance in new business lines.

Catalysts

Operates a commerce platform that connects merchants, consumers, and independent contractors in the United States and internationally.

• While analyst consensus expects DoorDash's acquisition of Deliveroo to enhance European scale and profit pools, this may substantially understate the impact-as DoorDash's proven operational playbook can accelerate unit economics normalization, potentially unlocking outsized margin expansion and market share capture well beyond initial expectations, driving both revenue and net margin inflections.
  
• Analysts broadly agree that DashPass subscriber growth and retention will support higher lifetime customer value, but this view is conservative; as DoorDash aggressively expands DashPass into new verticals (grocery, retail, convenience) and geographies, network effects and cross-shopping across categories could drive a step-change in recurring revenue and sustained earnings leverage.
  
• The continued shift in consumer behavior toward digital convenience-accelerated by urbanization, aging populations, and mobile adoption-positions DoorDash to outperform expectations for order volume growth and order frequency, creating durable revenue momentum across all business lines.
  
• DoorDash's deep investments into logistics automation, including leading-edge robotics and last-mile autonomy, have not only the potential to structurally compress delivery costs but also to fundamentally expand the economic viability of ultra-fast and micro-fulfillment delivery, resulting in meaningfully improved operating margins over time.
  
• The accelerating integration of local commerce, enabled by DoorDash's platform and new offerings like marketing-as-a-service (via SevenRooms), positions the company to become the indispensable infrastructure for restaurants, grocers, and retailers, expanding its addressable market and creating incremental high-margin revenue streams that could materially lift long-term EBITDA and free cash flow.

DoorDash Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on DoorDash compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming DoorDash's revenue will grow by 22.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 3.0% today to 20.5% in 3 years time.
• The bullish analysts expect earnings to reach $4.3 billion (and earnings per share of $8.87) by about July 2028, up from $339.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 41.3x on those 2028 earnings, down from 299.8x today. This future PE is greater than the current PE for the US Hospitality industry at 24.5x.
• Analysts expect the number of shares outstanding to grow by 2.97% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.86%, as per the Simply Wall St company report.

DoorDash Future Earnings Per Share Growth

Risks

• DoorDash's continued reliance on gig-economy labor faces structural risks from rising labor costs, potential gig worker reclassification, and expanding benefits mandates in the US and Europe, which could significantly increase operating expenses and put downward pressure on long-term net margins and profitability.
  
• Regulatory headwinds-such as fee caps imposed by cities like New York and the prospect of green taxes or additional delivery restrictions in response to environmental concerns-could reduce order volumes and take rates, directly impacting DoorDash's future revenues and gross profit.
  
• The company's recent strategy of international expansion through large acquisitions (Deliveroo and Wolt) brings execution risk and exposes DoorDash to fiercely competitive and lower-margin European markets, where market leadership is less clear and Deliveroo's historical margins are structurally lower, raising concerns about the sustainability of earnings growth.
  
• While DoorDash highlights improvement in newer business lines such as grocery and convenience, there remains a risk that diversification beyond core restaurant delivery may fail to achieve robust product-market fit or scale, threatening future top-line growth if key new segments stall or lag expectations.
  
• Intensifying competition from both established players (such as Uber Eats and potentially Amazon) and aggressive new entrants is driving up customer acquisition costs and necessitating greater promotional spending, putting persistent pressure on unit economics and creating the risk of sustained operational losses that could weigh on long-term earnings.

Valuation

• The assumed bullish price target for DoorDash is $303.76, which represents two standard deviations above the consensus price target of $238.36. This valuation is based on what can be assumed as the expectations of DoorDash's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $315.0, and the most bearish reporting a price target of just $179.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $20.9 billion, earnings will come to $4.3 billion, and it would be trading on a PE ratio of 41.3x, assuming you use a discount rate of 7.9%.
• Given the current share price of $239.82, the bullish analyst price target of $303.76 is 21.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.