To eliminate future disappointments, it is prudent to assess risk before investing. However, as businesses face newer risks, keeping a tab on them is easier said than done. Using TipRanks’ new Risk Factors tool, investors can ascertain the risk associated with a particular stock and keep up with the evolving risk scenario.
With the changing risk environment in the backdrop, let’s understand DoorDash (DASH) and Upstart’s (UPST) newly added risks.
DoorDash
According to TipRanks’ Risk Factors tool, DoorDash’s main risk category is Finance & Corporate, accounting for 41% of its total risks, and since September 2021, DoorDash has added four new risks to this category.
It’s worth noting that most of these newly added risks hovered around its all-stock Wolt acquisition. For context, DoorDash announced that it would acquire Wolt for €7 billion. The deal is strategically important for DoorDash as it will expand its footprint into newer international markets and boost its order value.
Thus, a failure to acquire or successfully integrate Wolt could adversely impact its business and operations.
DoorDash expects to complete the acquisition by the first half of 2022. Upon completion, DoorDash stated that it would be exposed to a higher foreign currency exchange rate risk. Nevertheless, Brian Fitzgerald of Wells Fargo sees Wolt deal as a “springboard into the European market for DASH,” which will double DoorDash’s addressable markets.
He has a Buy rating on DoorDash with a price target of $260. Meanwhile, DoorDash sports a Moderate Buy rating consensus on TipRanks based on eight Buys and eight Holds. The average DoorDash price target of $242 implies approximately 1.6% downside potential to current levels.
Further, DoorDash’s risk distribution profile indicates that two of six risk factors, including its Tech & innovation, and Ability to Sell risks, are above the sector benchmark.
Upstart
Similar to DoorDash, Finance & Corporate is the primary risk category for Upstart, accounting for 51% of its total risks. Further, Upstart has added six new risks to this category since September 2021. Notably, most of these newly added risks are related to the issuance of its convertible senior notes and privately negotiated capped call transactions.
The company stated that the capped call transaction could impact its stock price and expose it to counterparty risk. It is interesting to note that Upstart’s capped call transactions are likely to reduce the potential dilution to its common stock.
Notably, Upstart stock is under pressure on an expected slowdown in growth rate. It has declined by over 32% in one month. However, it is still up almost 800% over the past 12 months.
Upstart stock has a Moderate Buy consensus rating based on four Buys, two Holds, and one Sell. The average Upstart Holdings price target of $307.86 implies 23.4% upside potential to current levels.
Further, UPST’s risk distribution profile indicates that its Finance & Corporate and Legal & Regulatory risks are above the sector benchmark. However, its Tech & Innovation, Production, Ability to Sell, and Macro & Political risks are well below the sector benchmark.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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