DASH: Expanded U.S. Market Partnerships And Drone Delivery Will Drive Shares Higher

DoorDash’s analyst price target has been revised up slightly by $0.98 to $276.17. Analysts cite strong execution, resilient revenue growth, and optimism for the company's long-term investments and market positioning.

Analyst Commentary

Analysts have provided a range of insights regarding DoorDash's recent performance and future prospects, reflecting a mix of optimism about the company's execution and areas of caution related to investment and competition.

Bullish Takeaways

• Bullish analysts highlight accelerating growth in the core U.S. marketplace business. Gross order value (GOV) growth has outpaced expectations and contributed to upward adjustments in price targets.
• There is confidence in DoorDash's strong operational execution, resilience in revenue generation, and the company's ability to leverage partnerships, such as the expanded relationship with major grocery retailers.
• Several firms note that recent investments in technology and platform expansion, although weighing on near-term margins, position the company for potential attractive returns on invested capital and efficiency gains over the medium to long term.
• Upgrades have followed market selloffs, with analysts seeing opportunity as recent share price volatility has made the company's growth algorithm and long-term potential appear undervalued.

Bearish Takeaways

• Bearish analysts caution that ongoing and significant technology investments may suppress profitability in the near term, raising questions about margin trajectory amid heavy spending.
• Concerns persist regarding competition in the delivery sector, with some highlighting the risk of DoorDash ceding market share or facing pressure from rivals, particularly in categories like grocery and convenience.
• Some price target reductions reflect a more cautious view on immediate profit contribution from integrations and acquisitions, notably the impact of Deliveroo's addition to the business.
• There is a sense that components of the bullish case are increasingly priced into the stock, suggesting limited upside relative to recent outperformance, especially after quarters of strong results.

What's in the News

• Australian delivery workers could see a 25% pay raise to $20.19 an hour as part of a draft agreement between Uber Eats, DoorDash, and Australia's transportation union. Enhanced accident insurance is also included if approved (Reuters).
• Culper Research announced a short position on DoorDash, alleging the company has onboarded unauthorized contract workers at unprecedented scale, with estimates of these workers representing 26% to 57% of deliveries. DoorDash responded by calling the report "demonstrably false" (Bloomberg).
• Truist raised its price target for DoorDash to $340, citing solid execution and accelerating growth in its core U.S. marketplace, particularly in gross order value (Truist).
• DoorDash is leasing a warehouse in San Francisco's Mission District to test autonomous flying drone deliveries as part of its ongoing investment in delivery technology (San Francisco Chronicle).
• Australian pay and labor conditions for gig workers are under renewed scrutiny. Both regulatory and industry-led efforts are driving higher standards, setting possible precedents for other markets (Reuters).

Valuation Changes

• Consensus Analyst Price Target has risen slightly, increasing from $275.20 to $276.17.
• Discount Rate has edged up marginally, now at 8.30% compared to the previous 8.30%.
• Revenue Growth projections have increased modestly, moving from 23.71% to 23.91%.
• Net Profit Margin expectations have also increased slightly, rising from 13.65% to 13.75%.
• Future P/E (Price/Earnings) ratio has decreased, falling from 51.51x to 49.35x.