DoorDash (DASH 2.65%) shareholders lost ground to the market this week, with the stock falling 11% through Thursday trading compared to a 0.2% drop in the S&P 500, according to data provided by S&P Global Market Intelligence.
The decline added to significant short-term losses for the food delivery business, whose stock is down over 50% so far in 2022. It was powered by concerns about DoorDash's late Thursday earnings report. Yet that announcement was met with a positive initial reception on Wall Street, indicating a potential rebound in the stock on Friday.
After the market closed on Thursday, DoorDash said that revenue grew 35% for the selling period that ended in late March, thanks to the combination of higher volumes and rising average spending. Other engagement metrics pointed in the right direction, too, with order frequency reaching a new record and the pool of active users rising.
These wins came despite some major stresses on the business in early 2022, including rising prices and challenges finding enough delivery providers, which the company calls "dashers."
Executives said the results reflected DoorDash's growing strength in a competitive delivery industry. "We are proud of our execution," management said in a letter to shareholders, "and excited about the progress in our business."
DoorDash isn't profitable, yet. Net losses landed at $110 million in Q1 compared to $102 million a year earlier. The company still plans to spend aggressively on its growth initiatives, too, as it builds a much larger marketplace infrastructure that seeks to connect location restaurants with consumers in the area.
But sustainable earnings could be on the way as the company gains scale and relies more on advertising revenue. In the meantime, a continued rebound in the restaurant industry, plus enduring elevated demand for home delivery, seems primed to lift DoorDash's sales prospects in 2022.