DoorDash (DASH +3.23%) is the largest food delivery platform in America with a 67% market share. Uber Technologies (UBER 1.70%) also operates in that industry, although it's sitting in a distant second place with a market share of just 23%.
However, Uber is a much larger business because it also operates the world's largest ride-hailing platform, and it has a growing commercial freight segment. DoorDash isn't a one-trick pony, though -- it's expanding its delivery service to include groceries and retail goods.
So which company is the better long-term investment? Let's compare both based on three important metrics.
NYSE: UBER
Key Data Points
1. Growth
|
Company |
2023 Revenue |
2023 Revenue Growth (YoY) |
|---|---|---|
|
Uber |
$37.2 billion |
17% |
|
DoorDash |
$8.6 billion |
31% |
Data source: Uber, DoorDash. YoY = Year over Year.
According to the above table, DoorDash grew its revenue significantly faster than Uber in 2023. However, as I mentioned, Uber is a much larger company, and had four times more money come through the door. Simply put, the law of large numbers makes it harder for Uber to deliver the same percentage growth as DoorDash.
More than half of Uber's revenue ($19.8 billion) was attributable to ride-hailing last year. However, its food delivery business generated $12.2 billion in revenue, which means it's actually larger than DoorDash's delivery business.
How is that possible considering DoorDash has such a dominant market share in the U.S.? Well, DoorDash is only active in 30 countries, whereas Uber operates in 45. Uber can leverage its ride-hailing platform to quickly scale delivery in new markets, which is a huge advantage.
NASDAQ: DASH
Key Data Points
2. Profitability
DoorDash has struggled to bring its bottom line into the black on a GAAP (generally accepted accounting principles) basis, even at the height of the pandemic when its business was roaring with triple-digit percentage revenue growth. The company lost $558 million in 2023, but on the bright side, that was a 59% reduction from its $1.3 billion net loss in 2022.
DoorDash likes to cite its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization), which strips out one-off and non-cash expenses like stock-based compensation. Wall Street typically doesn't consider it to be "true" profitability, but DoorDash delivered $1.2 billion in adjusted EBITDA in 2023, which tripled its 2022 result.
Uber, on the other hand, is much further along, and delivered its first profitable year on a GAAP basis in 2023. The company generated $1.9 billion in net income, which was a massive swing from its $9.1 billion net loss in 2022. The latter figure was negatively affected by paper losses on some of Uber's investments, which are captured under GAAP accounting rules.
Image source: Getty Images.
3. Long-term potential
This is where Uber really separates itself from DoorDash. Around 6.8 million drivers work within Uber's network, and they earned $62 billion last year. But the company is investing heavily in fully autonomous self-driving technologies, which could eliminate some of that cost and transform its economics.
Uber has 10 autonomous partnerships across all segments of its business, and some of them are already in service. For example, Alphabet's Waymo autonomous vehicles are available on Uber in Phoenix, Arizona.
Uber also owns stakes in several companies developing self-driving technologies. It owns 21% of Aurora, which acquired Uber's in-house autonomous program in 2020, and it also owns a 4% stake in Joby Aviation, which is developing autonomous aerial vehicles.
Uber stock is currently trading near an all-time high, valuing the company at $160 billion. But I think its focus on autonomous ride-hailing in particular could catapult it to a $1 trillion valuation within the next 10 years.
Last year DoorDash released its largest-ever app update, which allows users to build three separate shopping carts -- one for restaurants, one for groceries, and one for retail products. Retail is the company's biggest opportunity because it captures a diverse array of stores, and more than 100,000 merchants have signed up so far. DoorDash can help those businesses offer same-day delivery to their customers, so they can compete with e-commerce titans like Amazon.
DoorDash ended 2023 with 37 million monthly active users, and their order frequency continues to rise, which is a great sign. However, with 150 million monthly platform customers, Uber eclipses DoorDash on that front, too.
The verdict
If it isn't already clear, I think Uber is the better investment. I simply can't see as much upside for DoorDash stock. It's still trading 44% below its all-time high from 2021, when its revenue growth peaked. Considering the company already has a dominant position in the U.S., which is the world's most valuable market, it's hard to imagine a scenario where it unlocks as much future potential as Uber.
Plus, DoorDash stock trades at a price to sales (P/S) ratio of 6.4, compared to Uber's 4.3. I think it's completely illogical for investors to price DoorDash at a 49% premium given everything I've discussed above, and it simply makes Uber look like an even better choice here.
