doordash stock: Doordash stock plunges over 15% after company unveils big spending plans
These investments aim to improve Doordash’s worldwide service but come with “direct and opportunity costs” in the short term. CEO Tony Xu defended the spending during an earnings call, saying Doordash is running business as it always has, focusing on solving customer problems the best way it can.
“Our track record of investing in areas where we currently operate…suggests we’ve had some success in replicating this playbook, and we’re doing so now for future growth,” Xu said, as noted in CNBC’s report. Doordash has spent heavily lately to enter new markets and give customers more choices as it competes with Uber and faces concerns about slowing consumer spending.
Doordash acquisitions and expansion
This year, Doordash acquired restaurant reservation platform SevenRooms for $1.2 billion. The company also acquired British food delivery company Deliveroo for $3.9 billion. In September, Doordash launched an autonomous delivery robot called 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 impact Doordash shares. According to CNBC’s report, Gawrelski added: “This is one of the best operational management teams in the industry, in our view, and longer-term investors are likely to remain supportive through this period. However, we believe patience may be required given inconsistent disclosures.”
Doordash earnings and growth
Doordash reported third-quarter profit of 55 cents per share, missing estimates of 69 cents per share. Revenue for the quarter rose 27% from last year to $3.45 billion, beating Wall Street’s forecast of $3.36 billion. For the fourth quarter, Doordash expects adjusted EBITDA to be between $710 million and $810 million, with the midpoint at $760 million. Analysts polled by FactSet expected $806.8 million. Doordash expects Deliveroo to contribute $45 million in adjusted EBITDA in the fourth quarter and approximately $200 million in 2026. Despite current concerns, Doordash shares are up more than 20% this year.
FAQ
Q1. Why did Doordash shares drop recently?
Doordash shares fell as investors reacted negatively to its plans to spend hundreds of millions of dollars on new products and global expansion.
Q2. What major acquisitions has Doordash made this year?
To expand its market and services, Doordash acquired SevenRooms for $1.2 billion and UK-based Deliveroo for $3.9 billion.
