Shares of DoorDash (NASDAQ:DASH) have been enjoying a remarkable relief rally after last year’s brutal nosedive. Moving ahead, the food-delivery firm may have the means to dash even higher relative to rivals like Instacart (NASDAQ:CART), which had its IPO last month, as the company continues making smart moves, including bringing in grocery partners. After a strong Tuesday session for markets that saw DASH stock soar over 7%, it may feel wrong for value-conscious investors to chase it.
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Despite the explosive move higher, the stock remains off considerably (still down 66%) from its all-time high just north of $257 per share. Things are finally looking up for the firm following its transition from the NYSE to the Nasdaq exchange. All considered, I remain bullish on the firm and its growth prospects from here.
DoorDash is Ready to Battle Against Instacart
It’s been an interesting year for IPOs as the market lost some of its footing in what was yet another rough month last month. With Instacart now duking it out for investors keen on the food-delivery space, it will be interesting to see how things pan out as DoorDash looks to keep its momentum going strong into year’s end and the early part of 2024.
Though it may be tough to get ahead in the fiercely competitive food-delivery market, I view DoorDash as having some distinct advantages that it can leverage to keep growing while defending itself from hungry rivals.
Most notably, DoorDash has been quite aggressive when it comes to bringing on grocery partners. In addition to pulling the curtain on a new list of grocers, DoorDash also added approximately 100,000 non-restaurant stores. The company brought on the new partners ahead of Instacart’s public market debut.
Coincidence? I think not, especially as the firm looks to gain ground in a more challenging economic environment. If the economy is bound for a recession, the only way to get ahead is to gain ground over competitors. In that regard, DoorDash is doing a great job of playing the difficult hand it and the rest of the industry is being dealt with right now as inflation continues to wither away consumer savings built up during lockdown.
Arguably, DoorDash’s latest partnerships took a bit of shine out of Instacart’s big IPO day. Whether the pace of such moves will help it gain more share, though, remains to be seen.
A Notable Analyst Upgrade Suggests DoorDash Can Keep Taking Market Share
Mizuho Securities’ James Lee hiked his rating to Buy from Hold, as well as his price target to $105 per share from $90, as he’s a believer in the firm’s abilities to keep gaining market share. I believe Lee is right on the money. At this trajectory, DoorDash looks well-positioned to continue having its way with competitors, publicly traded or not.
Unsurprisingly, Lee isn’t the only one who’s pounding the table on DoorDash stock right here. The stock boasts a Street-high price target of $125.00 per share courtesy of five-star-rated analyst Youssef Squali of Truist Financial, which entails a whopping 54.7% worth of upside potential from current levels.
Undoubtedly, such a high price target would entail that DoorDash will continue flexing its muscles. At around 94 times forward price-to-earnings (P/E), shares look pricier than rival Instacart, which goes for 18.3 times forward P/E. Though CART stock looks cheaper, I’d argue DASH may be the better bet, given its dominance and recent grocery gains.
Is DASH Stock a Buy, According to Analysts?
On TipRanks, DASH stock comes in as a Moderate Buy. Out of 22 analyst ratings, there are 11 Buys and 11 Holds — an even split. The average DoorDash stock price target is $99.33, implying an upside of 22.9%. Analyst price targets range from a low of $80.00 per share to a high of $125.00 per share.
The Takeaway
DoorDash stock’s turnaround may be tough to stop as it looks to claw away at the market share of its bitter rivals, including Instacart. You’ll pay a premium to the peer group at these prices, but it’s one worth paying up for, as taking market share will be the name of the game in a harsher economic climate.
