DoorDash Loss More Than Doubles On IPO Related Costs

DoorDash reported a higher year-on-year loss in its first quarterly report after the IPO in December. The food-delivery company’s net loss more than doubled from the prior-year period, however, revenues remained strong and more than tripled during the reported period.

DoorDash (DASH) reported a GAAP net loss of $312 million in 4Q compared with the prior-year period’s loss of $134 million, due to IPO-related costs and stock-based compensation.

Nevertheless, its 4Q revenues spiked 226% year-over-year to $970 million, and were higher than analysts’ estimates of $938 million. Furthermore, the company’s orders soared 233% year-over-year to $273 million, driven by increased average order frequency, higher retention rates, and new customer additions.

The company’s adjusted EBITDA stood at $94 million versus an adjusted EBITDA loss of $103 million in the year-ago quarter, led by an improvement in the cost structure.

The company said in a statement that, “We saw strong growth in both restaurant and non-restaurant merchants on our Marketplace in Q4 2020. We believe our large and highly engaged consumer base, our merchant-first approach, our broad portfolio of products, and our brand remain strong selling points to merchants. Although we experienced rapid growth in restaurants on our Marketplace in 2020, we believe we still have substantial room to increase penetration in the restaurant vertical in the coming years.” (See DoorDash stock analysis on TipRanks)

As for 1Q, the company expects adjusted EBITDA in the range of $0-$45 million. For 2021, it forecasts adjusted EBITDA to range between $0-$200 million.

Following the earnings release, Wells Fargo analyst Brian Fitzgerald lowered the stock’s price target to $165 (3% downside potential) from $185 and maintained a Hold rating, as the analyst believes that valuations remain stretched. In a note to investors, Fitzgerald said, “We believe that longer term, however, DASH has several ways to grow into its multiple, including four verticals (Restaurants, Convenience, Grocery, and Retail).”

Overall, the rest of the Street has a cautiously optimistic outlook on the stock, with a Moderate Buy consensus rating based on 13 Holds and 5 Buys. The average analyst price target of $167.13 implies downside potential of about 1.4% to current levels. Shares have lost around 11% in value over the past year.

TipRanks’ Stock Investors tool shows that investors currently have a Very Negative stance on DASH, with about 7% of investors reducing their exposure to DASH stock over the past 30 days.

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