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Why DoorDash Is Dashing Hopes With a 14% Drop Today

By Rich Duprey - Feb 22, 2021 at 4:24PM

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The third-party delivery company may face some tough times in the near future.

What happened

Shares of DoorDash (DASH 5.89%) tumbled 14% in late-day trading Monday despite the third-party delivery leader getting a price-target boost from Wall Street.

So what

Truist analyst Youssef Squali bumped his price target on DoorDash 10% to $210 from $190 because he believes the delivery specialist will report strong fourth-quarter results later this week.

Benefits from pandemic lockdown orders are still flowing to DoorDash, according to Squali. But as it moves through the year, it's going to come up against "very tough" comparables from last year when the shelter-in-place orders were in full swing.

Man on scooter delivering food.

Image source: Getty Images.

Now what

Dr. Fauci, President Biden's lead COVID-19 specialist, says just because we get the vaccine doesn't mean we'll be able to return to our routines. We'll continue to need to wear masks and practice social distancing, according to Fauci. However, consumers will likely resume normal activities despite the risk.

That return to normalcy should lead to dining out at restaurants, which may cause an eventual downturn for restaurant-delivery companies like DoorDash.

Squali is likely keeping his recommendation on DoorDash a hold because of that uncertainty. The stock had closed last Friday above $205 per share, meaning the company was within striking distance of Squali's price target but down to $182 per share heading into the market's close.

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