You can order more than just food through DoorDash (DASH 3.12%) these days. The popular app can also hook you up with groceries, cosmetics, and sporting goods. One more thing that DoorDash has been delivering in its brief tenure as a public company -- this one, a shareholder exclusive -- is indigestion.
Underwriters priced its Wall Street debut at $102, but DoorDash shares opened at $182 on its first day of trading in late 2020. There's been a lot of heartburn for investors ever since. DoorDash stock is trading for less than a third of its first public trade. After shedding more than two-thirds of its value in 2022, DoorDash has been moving higher in 2023 but it's still closer to its 52-week low than its peak.
Its first big test of 2023 is coming later this week. DoorDash reports its fourth-quarter results after Thursday's market close.
Image source: Getty Images.
Order up
The top dog of restaurant takeout delivery is doing a good job of growing its business. Order volume and revenue have grown sequentially in every quarter as a public company.
It hasn't squandered the platform's positive momentum despite the unimpressive stock chart. Revenue rose 33% in its latest quarter, accelerating from a 30% year-over-year clip in the second quarter. A lack of reported profitability has been the bane of many a growth stock's existence, but DoorDash is getting better on the way to the bottom line. Its contribution profit has widened for four straight quarters. DoorDash sees the contribution profit and margin growing again for its flagship restaurant delivery service in 2023. If it doesn't reflect on the bottom line it's because DoorDash is investing the majority of its contribution profit there in new categories.
DoorDash is getting its growing user base engaged, and that's good news for all parties. Merchants lean more on DoorDash as a lead generator. DashPass subscribers embed themselves deeper in the DoorDash ecosystem. Drivers know that consistently growing order volume translates into more opportunities to cash in on the gig economy.
Turning to Thursday's fresh financials, there's good news, bad news, and ugly news. Starting with the good news, analysts see top-line gains continuing to accelerate. They see revenue climbing 36% in the holiday quarter. The bad news is that Wall Street sees the quarterly deficit at DoorDash widening to $0.68 a share in the fourth quarter from $0.45 a share a year earlier.
The ugly news? Well, let's just say that analysts have a way of running out of red ink in forecasting the bottom line at DoorDash. The last four financial reports haven't been pretty.
| Quarter | EPS (est.) | EPS (actual) | Miss |
|---|---|---|---|
| Q4 2021 | ($0.25) | ($0.45) | 80% |
| Q1 2022 | ($0.41) | ($0.48) | 17% |
| Q2 2022 | ($0.41) | ($0.72) | 76% |
| Q3 2022 | ($0.60) | ($0.77) | 28% |
Data source: Yahoo! Finance. EPS = earnings per share.
No one should be surprised if DoorDash serves up a fourth-quarter loss of more than the $0.68 a share that analysts have as their profit target. Wall Street has been woefully short lately, missing reality at a double-digit-percentage clip in each of the last four financial updates.
Things don't have to end badly for the gig economy bellwether. The larger-than-expected losses are likely the handiwork of DoorDash investing in growth beyond its eatery core. It's working on a picture bigger than your appetite. The bottom line won't be pretty, but there are more courses to go.
