These investments aim to improve Doordash’s service worldwide but come with “direct and opportunity costs” in the short term. CEO Tony Xu defended the spending during an earnings call, saying Doordash runs its business as it always has — focusing on solving customer problems in the best ways.
Xu said, “Our track record in investing in the areas that we currently have operating … have suggested that we’ve had some success in repeating this playbook, and we’re doing this now for future growth”, as stated in the report by CNBC. Recently, Doordash has spent heavily to enter new markets and give more options to customers as it competes with Uber and faces concerns over slowing consumer spending.
Doordash acquisitions and expansion
This year, Doordash bought the restaurant booking platform SevenRooms for $1.2 billion. The company also acquired the British food delivery firm Deliveroo for $3.9 billion. In September, Doordash launched an autonomous delivery robot named Dot. The company also introduced new DashMart fulfillment services for retailers.
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Wells Fargo analyst Ken Gawrelski said the size and scope of these investments will continue to affect Doordash’s stock. According to the report by CNBC, Gawrelski added, “In our view, this is one of the best operational management teams in the sector and longer duration investors are likely to remain supportive through this period. However, given inconsistent disclosure, we believe patience may be required”.
Doordash earnings and growth
Doordash reported third-quarter profit of 55 cents per share, missing the forecast of 69 cents per share. Revenue for the quarter rose 27% from last year to $3.45 billion, beating Wall Street’s $3.36 billion estimate. For the fourth quarter, Doordash expects adjusted EBITDA between $710 million to $810 million, with a midpoint of $760 million. Analysts surveyed by FactSet expected $806.8 million.Doordash expects Deliveroo to contribute $45 million to adjusted EBITDA in the fourth quarter and around $200 million in 2026. Despite current worries, Doordash shares have risen more than 20% this year.
FAQs
Q1. Why did Doordash stock drop recently?
Doordash stock fell because investors reacted negatively to its plans to spend hundreds of millions on new products and global expansion.
Q2. What big acquisitions did Doordash make this year?
Doordash bought SevenRooms for $1.2 billion and the UK-based Deliveroo for $3.9 billion to expand its market and services.