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Why DoorDash Stock Jumped 20.8% Today

By Travis Hoium – Nov 10, 2021 at 3:52PM

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Buying Wolt got investors' attention today.

What happened 

Shares of food delivery stock DoorDash (DASH 0.57%) 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.

Person delivering food from a backpack.

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. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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