DASH: Integration Of Deliveroo Will Drive Geographic Expansion And Long-Term Opportunity

Key Takeaways

• Expanding into new sectors and regions, along with AI-driven efficiency, promises accelerated growth, improved margins, and a broader profit base beyond core delivery.
  
• Enhanced platform features and gig worker pool growth are strengthening operational scalability and user retention, supporting durable long-term earnings potential.
  
• Expanding operations, rising costs, market saturation, and regulatory pressures threaten DoorDash's growth prospects, margins, and profitability without strong execution and successful diversification.

Catalysts

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

• Increasing consumer comfort with online transactions and demand for convenient, time-saving solutions continues to drive record user acquisition and all-time high order frequency, indicating that DoorDash's total addressable market remains underpenetrated and poised for long-term revenue growth.
  
• Rapid expansion into new verticals (grocery, retail, convenience, pharmacy) and international markets is yielding faster growth rates and improving unit economics, which should diversify and accelerate topline revenue while supporting net margin expansion.
  
• Strategic investments in AI and automation-such as enhanced search, personalization, logistics optimization, and autonomous/robotic delivery-are expected to lower fulfillment costs per order over time, driving sustained improvements in operating leverage and net margins.
  
• Accelerating growth of high-margin revenue streams (notably, platform advertising and emerging SaaS offerings like the SevenRooms acquisition) is expanding DoorDash's profit pool beyond core delivery, supporting further earnings upside.
  
• The proliferation of gig economy work and ongoing platform improvements are expanding DoorDash's Dasher pool and supporting efficient, scalable operations, which, when combined with improvements in cohort retention and order frequency, are expected to bolster long-term earnings and margin resilience.

DoorDash Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming DoorDash's revenue will grow by 19.6% annually over the next 3 years.
• Analysts assume that profit margins will increase from 6.6% today to 15.5% in 3 years time.
• Analysts expect earnings to reach $3.2 billion (and earnings per share of $6.95) by about September 2028, up from $781.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $3.9 billion in earnings, and the most bearish expecting $1.7 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 55.2x on those 2028 earnings, down from 140.3x today. This future PE is greater than the current PE for the US Hospitality industry at 23.9x.
• Analysts expect the number of shares outstanding to grow by 2.84% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.44%, as per the Simply Wall St company report.

DoorDash Future Earnings Per Share Growth

Risks

• DoorDash's ongoing expansion and investments into numerous new verticals and international markets increases operational complexity and cost structure, raising the risk that execution missteps, slower-than-expected adoption, or inability to adequately localize could constrain long-term revenue growth and result in thinner net margins.
  
• Heavy investments in headcount and product development-despite increased automation and AI initiatives-may outpace revenue growth, creating operational leverage challenges and putting sustained pressure on overall earnings and margins, especially if cohort growth stalls or efficiency gains materialize slower than anticipated.
  
• Rising labor costs, seasonally variable Dasher expenses, and potential regulatory pressures surrounding gig economy work present persistent risks to fulfillment cost structure, which could erode DoorDash's net margins and challenge long-term profitability, particularly as the company relies on discipline rather than specific margin targets.
  
• Although DoorDash continues to penetrate new customer cohorts and drive frequency, there is implicit risk of U.S. market saturation, as suggested by the platform's already high household reach, which could slow long-term user growth and cap future revenue expansion if new verticals do not sufficiently offset this trend.
  
• The company's success in growing platform utility and subscription services (like DashPass and Wolt+) depends on continuous product improvement and partner integration; any lapses in execution, intensifying competition, or shift toward direct-to-consumer channels could negatively impact customer retention and revenue growth, thereby compressing operating margins and earnings power over time.

Valuation

• The analysts have a consensus price target of $294.194 for DoorDash based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $360.0, and the most bearish reporting a price target of just $205.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $20.4 billion, earnings will come to $3.2 billion, and it would be trading on a PE ratio of 55.2x, assuming you use a discount rate of 8.4%.
• Given the current share price of $256.53, the analyst price target of $294.19 is 12.8% 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.