DoorDash (DASH) is a major American company valued at over $50 billion that enable people to order food from local restaurants and receive it within minutes.Â
It generates its revenues by charging a commission from restaurants and taking a delivery fee from customers. Over time, the company has also launched a subscription service known as DashPass, which generates consistent revenues. It competes wih companies like Uber, Grubhub, Postmates, and Instacart.Â
DoorDash has grown rapidly in the past few years, which has pushed its total monthly customers to over 31 million and its valuation to over $50 billion. At the same time, its annual revenue has soared from just $885 million in 2019 to over $8.63 billion in 2023 and analysts expect it to rise to over $10.54 billion and $12.3 billion in the next two financial years.Â
DoorDash stock has risen by 25% this year and by 55% in the last 12 months as it has continued to do better than expected. It was trading at $124 on Monday while the HypeIndex rose by 87%.
Positive Hype
DoorDash has generated several important news events recently, that have contributed to the positive hype.
Its second-quarter results showed that business continued doing well even as competition rose and consumer spending softened because of inflation.
Its total order delivered rose by 19% to 635 million while the marketplace Gross Order Value (GoV) rose by 20% to $19.7 billion.Â
DoorDash’s quarterly revenue rose to $2.6 billion while its net revenue margin spiked to 13.3%. Its revenue in Q2 was much higher than what it made in the four quarters of 2019.
The number of merchants in the ecosystem continued rising as the company boosted its available verticals to include health, alcohol, and home improvement industries.Â
The company is also growing its international business using its Wolt solution, which it acquired in a 7 billion deal in 2021. That acquisition has helped it reach more countries, mostly in Europe.Â
Doordash has also done well by partnering with Chase, the biggest bank in the United States. The partnership means that Chase card customers will receive recurring benefits on orders from thousands of companies.Â
Negative hype
DoorDash has also received negative hype from investors and analysts in the past few months.
Valuation is a big concern since the company has a market cap of over $51 billion and annual revenues of $8.63 billion in 2023. This revenue is expected to hit $12 billion in 2026.Â
Uber, in contrast, has a market cap of over $144 billion and generated $$37 billion in 2023. As such, by dividing the two, we see that DoorDash is trading at 5.93 sales while Uber trades at 3.8 sales, meaning that it is a bit overvalued.Â
Uber is already profitable and made over $2.1 billion in net profit while DoorDash lost over $500 million.Â
The other negative hype is that DoorDash insiders have been selling the stock. Data shows that they have sold 640,168 shares in the last three months and 4.7 million in the last 12 months. The sellers include Tony Xu, its CEO, Keith Yandell (CBO), and Ravi Inukonda (CFO).Â
There are also concerns about the company’s competition and growth path now that the industry has become highly saturated.Â
Finally, the path to profitability is still unclear since the company lost over $158 million in the last quarter.
Final thoughts on DoorDash stock
DoorDash stock is doing well after it published strong financial results earlier this month. Technically, it has moved above the upper side of the falling wedge pattern. A wedge is a highly positive pattern since it is a good reversal sign.Â
The stock has now formed a bullish pennant chart pattern, which often results in a positive breakout. Therefore, the stock will likely have a strong breakout as buyers target the key resistance point at $143.18, its highest swing on March 27 and 15% above the current level.
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