What happened
Shares of food delivery stock DoorDash (DASH +2.97%) jumped as much as 20.8% in trading on Wednesday after the company reported earnings and a big acquisition. Shares are still up 10.9% at 3:30 p.m. EST.
So what
Third-quarter 2021 revenue jumped 45% versus a year ago to $1.3 billion as total orders grew 47% to 347 million. Gross profit jumped 42% to $665 million and the company reported a net loss according to generally accepted accounting principles (GAAP) of $101 million, or $0.30 per share. Analysts were expecting revenue of $1.18 billion and a loss of $0.26 per share, so investors are clearly cheering the higher than expected revenue.
Image source: Getty Images.
Overshadowing earnings was the announcement that DoorDash will acquire Wolt, an international delivery technology company similar to DoorDash. This is an all-stock deal for about $8 billion and DoorDash is expecting to close the transaction in the first half of 2022.
Now what
Building scale is priority No. 1 in the online ordering business so DoorDash's growth and acquisition should be seen as good news long-term. Now, the company will have to prove it can make the deal profitable. Management expects the combined companies to generate breakeven to $500 million in adjusted EBITDA in 2022. If results are on the high end of that DoorDash could be a big winner for investors.
