DoorDash Up 19% on Wolt Acquisition and Q3 Revenue Beat

DoorDash (DASH) shares jumped 19% during the pre-market session on November 10, after the online food ordering and delivery platform announced its plans to acquire food delivery platform Wolt. This development coincided with the company’s third-quarter results.

Doordash to Acquire Wolt for €7B

Doordash revealed its plans to acquire Wolt in an attempt to expand its international footprint in an all-stock transaction worth €7 billion.

The acquisition is expected to close in the second half of 2022, subject to certain regulatory approvals. Upon completion, Wolt Co-Founder and CEO, Miki Kuusi, will run DoorDash International.

Founded in 2014 in Helsinki, Finland, Wolt’s leading local commerce platform has a presence in 23 countries with a team of more than 4,000 employees.

The deal is expected to be accretive to gross order value (GOV) growth in 2022. Furthermore, the company forecasts combined adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) of $0 to $500 million in 2022. (See DoorDash stock charts on TipRanks)

DoorDash CEO, Tony Xu, commented, “Under the leadership of Miki Kuusi, Wolt has built a culture of optimism, operational rigor, and bias for action that matches our own. By joining forces, we believe we will accelerate our product development, bring greater focus to each of our markets, and improve the value we provide to consumers, merchants, as well as Dashers and couriers around the world.”

Mixed Quarterly Figures

Meanwhile, Q3 revenues jumped 45% year-over-year to $1.28 billion, exceeding consensus estimates of $1.17 billion. The growth reflects a surge in marketplace GOV, which witnessed growth of 44% to $10.4 billion, against the same quarter last year.

Furthermore, total orders and members both grew to all-time highs of 347 million and 9 million, respectively. Similarly, adjusted gross profit increased 42% year-over-year to $709 million.

However, the company reported a loss of $0.30 per share, falling 2 cents short of the Street’s estimate of a loss of $0.28. Yet, it compares favorably against a loss of $0.96 per share reported in the same quarter last year.

Doordash Provides Q4 Outlook

Based on Doordash’s ongoing investment in new categories, international markets, and Platform Services, the company provided a fresh outlook for the upcoming fourth quarter.

For the fourth quarter, the company anticipates marketplace GOV to be in the range of $10.3 billion to $10.7 billion. Similarly, it expects adjusted EBITDA to be in the range of $0 to $100 million for the fourth quarter.

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Management Weighs In

Looking ahead, Doordash management commented, “There is a much larger group of people who are not members and order much less frequently on average, as well as an even larger group who do not use DoorDash.”

Management further added, “To attract these consumers and win their consistency, we intend to continue investing to expand the number of merchants we connect people with, broaden the range of services we offer, improve our quality and ease-of-use, and extend our affordability. If we execute effectively, we believe we can earn the loyalty of many new consumers and drive increases in retention and engagement for many years to come.”

Wall Street’s Take 

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 9 Buys and 4 Holds. The average DoorDash price target of $216 implies 12.49% upside potential to current levels. Meanwhile, shares have gained 38% year-to-date.

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