DoorDash (DASH 3.12%) shares tumbled 10.5% through 11 a.m. ET on Friday morning after reporting a huge earnings miss last night.

The food delivery company was supposed to lose only $0.16 per share in Q4 on sales of $2.24 billion, according to a consensus of analysts who follow the stock. DoorDash managed to report better-than-expected sales of $2.3 billion. However, the company's quarterly loss was more than twice as big as expected -- $0.39 per share.

DoorDash earnings report

Digging into the numbers, it seems DoorDash grew its total number of orders serviced by 23% in Q4 2023 compared to Q4 2022. Order size didn't grow quite as fast, up 22%. But revenue flowing to DoorDash itself (as opposed to its restaurant partners) grew significantly faster, up 27% year over year.

If only the same could be said about earnings.

As its business grew, DoorDash was able to add 50 basis points to its gross profit margin, which climbed to 5.8%. On the bottom line, losses got smaller, and the net profit (i.e., loss) margin slimmed to just 0.9%. Even so, that means DoorDash continued to lose money on every dollar of business it did.

DoorDash guidance

Ultimately, this is a story of analysts thinking DoorDash could slim its losses faster than the company ended up slimming them -- and investors being disappointed by the company's failure. But the losses did still slim somewhat. Instead of losing $1.65 per share, as it did in last year's Q4, DoorDash lost only $0.39 per share this time around.

So, can DoorDash compensate for lost time and continue growing sales and lowering losses in Q1 2024?

Perhaps. Turning to guidance, DoorDash didn't tell investors what it expects either sales or earnings to look like in Q1 2024. Management instead gave guidance on "marketplace gross order volume," which it expects to rise about 6% sequentially in Q1, and for adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization, a non-GAAP term), which it expects to decline sequentially. The midpoint of the company's predicted range, $350 million, would represent about a 3.5% decline.

This would appear to imply that, at least in Q1, management sees profit margins worsening in the coming quarter despite growth in sales. Coming on the heels of an earnings miss in Q4, it's no wonder investors are disappointed.