![]() ![]() We value the stock at $130 per share, about 9x forward revenues. Moreover, while DoorDash has been posting robust revenue growth, with its sales rising by about 87% year-over-year over the first nine months of this year, the company remains unprofitable. ![]() As the restaurant industry, which DoorDash works with, is inherently low margin, customers will ultimately have to bear the impact of higher fees to drive profits. DoorDash’s biggest cost is related to its delivery partners and this number is variable, rising in proportion with the number of orders, giving the company little leverage. ![]() So is DoorDash stock a buy at about $161 per share currently? While the recent correction certainly makes the stock more palatable for investors looking to play the delivery space, we still have concerns about DoorDash’s valuation (the stock trades at over 12x our 2021 revenue estimate) and weak unit economics. That said, DoorDash might actually see demand for its services rise in the near term, if the highly infectious new virus strain results in renewed lockdowns and travel restrictions, people could spend more time at home and order in, rather than heading out to restaurants. confirmed its first case of the Omicron variant of the novel coronavirus, which is believed to be much more transmissible and could evade the immune response provided by vaccines. Moreover, the broader markets have also seen some weakness, as the U.S. Firstly, investors have likely been reducing exposure to high-growth technology stocks due to rising inflation and an increasingly hawkish stance by the Federal Reserve, which has indicated that it could consider speeding up the tapering of its large-scale bond-buying at its next meeting. There are a couple of factors driving the recent sell-off. Named “IC+”, the plan would effectively make legal the misclassification of gig workers as independent contractors exempt from basic (and expensive) labor law protections such as a minimum wage, health care, workers’ comp, and other benefits.DoorDash stock (NYSE: DASH) has declined by about 11% over the past week and remains down by almost 35% from its early November highs. After a coalition led by Uber and other app-based gig companies spent over $200 million on a ballot measure written to exempt themselves from reclassifying gig workers as employees, the coalition promised to pursue similar legislation nationwide. Part of DoorDash’s fortunes can be traced back to the pandemic, but also to the victory of Prop 22 in California-its largest market. At its initial public offering price, SoftBank's stake was worth $6.4 billion-after the nearly 80 percent jump in stock price on Wednesday, it's worth about $10 billion. DoorDash pointed to improvements in its margins as evidence of a clear path to profitability, but given the risks its S-1 highlighted concerning the chance that Dasher algorithmic pay models could spark regulatory or legal battles-as well as the failure of competitors to grow into profitability-it’s yet to be seen whether the company can deliver on this promise.īefore its market debut, DoorDash promised to yield a massive return to its largest investor: SoftBank's Vision Fund, the $98 billion fund run by Japanese billionaire Masayoshi Son that invested $680 million for a 24.9 percent stake in the company. At $182 a share, DoorDash’s value is floating at $60 billion.ĭoorDash's S-1 indicated huge growth, with 2019 revenues growing 204 percent from the previous year and revenue up 226 percent for the nine months ending September 30 thanks to the pandemic. The day before its market debut, DoorDash modified its target range yet again to $102 per share, looking to raise $3.4 billion at a valuation of $39 billion. A week later, DoorDash pushed its target price range to between $90 and $95 per share, raising up to $3.1 billion on its offering at a valuation of $35.3 billion. This sky-high stock price comes despite the fact that DoorDash, like most if not all gig economy companies, has never been profitable.Īfter it warned investors in its S-1 that it may never be profitable and its own pay model was a risk to its business, DoorDash revealed late November it was seeking a valuation of up to $31.6 billion and hoping to raise upwards of $2.8 billion in its offering-shares would be priced at $75 to $85. ![]()
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