Founded in 2013, DoorDash Inc. (New York Stock Exchange: dash) provides food ordering and delivery services through its online platform.
With a price per share of $102, the company went public in December 2020. Remarkably, its shares jumped 85% on the first day of trading. However, since then the stock has fallen 63.9% to $68.48.
In its recently released annual report on online restaurant ordering trends, the company said, “Order delivery remains a consumer preference with 83% of consumers ordering delivery the same or more than last year and 86% reporting ordering takeout/pickup as much or more than last year.” This is a good reflection of DASH’s short-term performance.
On May 18, 2022, to reduce stock dilution, the company’s board of directors approved a repurchase program of up to $400 million of its common stock.
Earlier in May, DoorDash released its first quarter 2022 results. The company managed to register a 23% increase in total orders year-over-year.
Monthly active users (MAUs) and DashPass members have reached record levels. Adjusted EBITDA increased 25.6% year over year to $54 million and revenue increased 35% year over year to $1.5 billion.
DoorDash continues to invest to expand into new markets and enter new delivery categories.
According to bringg.com, online food delivery sales are expected to reach $220 billion by 2023 and account for 40% of total restaurant sales. We expect this to bode well for DoorDash’s results.
On the other hand, rising gas prices and the costs associated with purchasing and maintaining vehicles may continue to impact DoorDash’s profitability. Additionally, money spent on advertising, including discounts and coupon offers, could put pressure on profit margins.
Recently, Wolfe Research analyst Deepak Mathivanan maintained a Buy rating on DoorDash, but lowered the price target to $90 from $110. The new price target implies a potential upside of 17.48% from current levels.
On May 6, Needham analyst Bernie McTernan maintained a Buy rating on the stock with a price target of $140, implying upside potential of 82.62% from current levels. .
Overall, the stock has a moderate buy consensus rating based on 11 buys versus six takes. DoorDash’s average price target of $125.71 implies a potential upside of 63.45% from current levels.
Data from TipRanks
According to TipRanks’ website traffic tool, doordash.com saw a 58.3% monthly increase in global unique visits in April, compared to the previous year. In addition, traffic to the company’s website has increased by 102.9% year-to-date compared to the same period last year.
This data also indicates that the company’s performance in the next quarter may remain promising.
Meanwhile, TipRanks’ Insider Trading Activity tool shows that sentiment in DASH is currently neutral. Over the past three months, company insiders have purchased shares worth $192.1 million.
However, TipRanks’ hedge fund trading activity tool shows that hedge fund confidence in DoorDash is currently very negative, as the cumulative change in holdings in the 15 hedge funds that were active over the past quarter has been a decrease of 3.1 million shares.
DoorDash’s future prospects look promising, as the habit of ordering food from consumers is here to stay. Additionally, the acquisition of Wolt, which is expected to close this quarter, should support DoorDash’s future growth. However, rising costs and fierce competition remain major obstacles for the company.
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