![]() 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. This makes us concerned about DoorDash’s unit economics. Moreover, DoorDash has not been able to turn a profit despite posting big growth over the past year and its loss over Q2 2021 was also larger than expected. Sure, DoorDash’s has posted breakneck revenue growth recently, with sales rising 3x last year and projected to rise over 45% this year, but growth rates will slow considerably in 2022. The stock trades at a whopping 15x forward revenue, almost like a software-type business that has thicker margins and more operating leverage. That said, despite the optimism, we think DoorDash stock is considerably overvalued at its current market price of $208 per share. Moreover, the company also posted stronger than expected revenues over Q2 2021 with sales rising 83% year-over-year to about $1.2 billion, despite the relaxation of some Covid-19 guidelines over the quarter, giving investors some confidence that demand could hold up reasonably well even post Covid. Firstly, the surge in Covid-19 cases in the U.S., caused by the highly infectious Delta variant of the virus, will likely delay return to office plans and this could also bode well for stay-at-home stocks such as DoorDash. The recent rally was driven by a couple of factors. The stock is also up by about 50% year-to-date. ![]() DoorDash Stock Looks Highly Overvalued At $208ĭoorDash stock (NYSE: DASH) has rallied by almost 10% over the last month, significantly outperforming the S&P 500 which declined about 1% over the same period. Want upside from growing digitization post-Covid-19 but don’t want to pay a big premium for tech stocks? Check out our theme on Value Tech Stocks ![]() A change of 7.7% or more over twenty-one trading days has a 38% event probability, which has occurred 79 times out of 210 in the last year.DoorDash stock rose 7.7% over the last twenty-one trading days (about one month), compared to the broader market (S&P500) which rose by 6.9%.A change of 7.7% or more over ten trading days has a 28% event probability, which has occurred 62 times out of 221 in the last year.DoorDash stock rose 7.7% over the last ten trading days (two weeks), compared to the broader market (S&P500) which rose by 2.1%.See our analysis DoorDash Valuation : Expensive Or Cheap? for more details on DoorDash’s valuation. 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. 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. (Photo illustration by Beata Zawrzel/NurPhoto via Getty Images) NurPhoto via Getty ImagesĭoorDash stock (NYSE: DASH) has declined by about 11% over the past week and remains down by almost 35% from its early November highs. Numbers show that the Covid-19 pandemic resulted in a significant increase of meals ordered online through food delivery apps and websites. DoorDash app logo is displayed on a mobile phone screen photographed for illustration on a plate and. ![]()
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