Doordash stock falls 17%, suffers worst day ever

Door PanelShares tumbled 17% in their worst session ever as investors rejected the company’s aggressive spending strategy.

The food delivery platform said it plans to devote “several hundred million dollars” next year to new product initiatives such as autonomous delivery and a new global technology stack.

Doordash said those plans would develop its product globally but would involve “direct and opportunity costs” in the short term.

CEO Tony Xu defended the company’s spending decisions during the earnings call with analysts, saying Doordash is running the business as usual to solve customers’ problems at the highest quality.

“Our track record of investing in areas where we currently operate suggests that we have had some success in replicating this playbook, and we are now doing so for future growth,” he said.

Doordash has spent big in recent months to open new markets and expand options for customers as it battles industry rivals. Uberand concerns about a slowdown in consumer discretionary spending are increasing.

This year, the California-based company bought restaurant reservations platform SevenRooms for $1.2 billion and bought British food delivery company Deliveroo in a deal worth $3.9 billion. Doordash also launched its autonomous robot delivery robot, known as Dot, in September. DashMart fulfillment services for retailers.

Wells Fargo analyst Ken Gawrelski wrote that the length and breadth of these investments will continue to be an important issue for the company’s shares.

“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,” he wrote. “However, given the inconsistent statements, we believe patience may be necessary.”

Doordash’s third-quarter earnings came in at 55 cents per share, below the 69 cents per share that LSEG had forecast. Revenues increased 27% year over year to $3.45 billion; that was above Wall Street’s estimate of $3.36 billion.

The company expects fourth-quarter adjusted EBITDA to be between $710 million and $810 million, with a midpoint of $760 million. Analysts surveyed by FactSet expected $806.8 million.

Doordash expects Deliveroo to add $45 million to its adjusted EBITDA in the fourth quarter and about $200 million in 2026.

Shares are up more than 20 percent this year.