It's been a year since I wrote about three relatively new "doors" -- DoorDash (DASH -1.25%), Opendoor Technologies (OPEN -4.93%), and Nextdoor Holdings (KIND -1.63%) -- that investors didn't want to open. The three stocks had hit the market within the two previous years. They were out of favor then, and 2022 didn't play out any better.
DoorDash, Opendoor, and Nextdoor would go on to plummet 67%, 92%, and 74%, respectively, in 2022. It's been a different story so far in 2023. The three stocks are up 22%, 106%, and 18%, respectively, averaging out to a 49% year-to-date surge. Let's take out a keychain to see why these "door" prizes are opening so freely this year.
Image source: Getty Images.
DoorDash
The leader of restaurant takeout delivery has expanded the offerings its fleet of drivers can bring to your door, but the one thing it hasn't been able to deliver is profitability on a reported basis. However, there are some encouraging signs that it can get there if it continues to scale its operations.
The popularity of DoorDash isn't in question. It has been able to grow its order volume -- and revenue -- sequentially every single quarter since its IPO in late 2020. Despite the steady stream of losses, its contribution profit has moved higher for four consecutive quarters. In short, it's driving in the direction of sweet green.
DoorDash has been able to take advantage of its scale to strike unique partnerships, and I'm no longer talking about just retailer partners. On Tuesday DoorDash announced a deal with Roku where a targeted merchant ad can place click-to-order offers via DoorDash within their actual Roku ads. It's a win-win-win for DoorDash, Roku, and the restaurant or retailer teaming up with DoorDash for home delivery. And, let's face it, if you're already streaming something good you don't want to interrupt your experience to drive to an eatery or store.
Opendoor
In late 2021 there were three publicly traded companies engaged in the home-flipping business. Today it's just Opendoor, as a leading real estate portal and a high-tech residential property broker have bowed out of this challenging space. It wasn't easy to turn a profit even when homes were rising. How do you make the iBuyer model work when prices are vulnerable and demand is thinning in the face of rising mortgage rates?
Opendoor was always better at this niche than the other two players. It didn't have much of a choice, as this was its primary business. It was the one generating a contribution profit until the bull market for housing finally buckled in the latter half of 2022.
Opendoor reports its fourth-quarter results later this month, but it was still growing in its previous financial update. Revenue soared 48% to hit $3.4 billion in the third quarter that ended in September. It had $6.1 billion worth of homes to flip at the time. The quarterly report coming later this month won't be as kind.
Starting lines matter in any race, so it's important to frame Opendoor's success correctly. The stock has more than doubled in 2023, but as the biggest loser of the three in 2022 the shares are still down 84% from where they were at the beginning of last year. With the Fed starting to slow on rate hikes, market sentiment is starting to improve for the real estate market.
Nextdoor
Checking in with the weakest of the three bounces -- which is still ahead of the general market's 7% year-to-date ascent -- is Nextdoor. The hyperlocal message board where locals can share experiences, specialist referrals, and general neighborhood complaints timed its market debut like an unwelcome house guest. It hit the market as a special purpose acquisition company (SPAC) in late 2021, just as the market was tiring of unprofitable growth stocks.
Nextdoor continues to be years away from profitability. As a free ad-supported model, its growth prospects have also deteriorated. Revenue growth has decelerated from 66% when it hit the market to a mere 2% in its latest quarter.
It's a fixer-upper right now. Nextdoor's latest quarter fell short of Wall Street expectations, and its guidance was even worse. It will need the ad market to bounce back as well as continue to grow its community platform's reach to keep the rally going at this point.
