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Here’s Why DoorDash Bounced 12% Despite Q2 Loss

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DoorDash bounced 12% in the extended trading session yesterday after the company reported impressive revenue growth and adjusted EBITDA of $103 million, which was above the high end of the company’s outlook range.

DoorDash (DASH) shares jumped almost 12% during the extended trading session on August 4, despite the company delivering mixed second-quarter results. Based in California, DoorDash operates an online food ordering and food delivery platform.

Investors welcomed the 30% top-line growth on the back of higher order frequency as well as increased monthly active users reported despite a challenging macroeconomic backdrop.

According to the TipRanks’ Website Traffic Tool, the web visits to doordash.com were up 143.19% year-over-year in June 2022. Moreover, traffic more than doubled in the first six months of this year. The spike in website visits indicated that Doordash could benefit from a rebound in demand.

Learn how Website Traffic can help you research your favorite stocks.

Mixed Q2 Results

During the Q2 quarter, DoorDash revenues totaled $1.61 billion, up 30% year-over-year. It easily outperformed the $1.52 billion average prediction. In particular, total orders rose 23% while marketplace gross order value (GOV) grew 25% y/y to $13.1 billion.

Despite strong revenue numbers, the company posted a loss of $0.72 per share, much worse than analysts’ expected loss of $0.40 per share. Furthermore, it was also lower than the previous year’s loss of $0.30 per share.

Positively, however, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $103 million came in above the high end of the company’s outlook range.

Looking ahead, the company forecasts Q3 Marketplace GOV to be in a range of $13 billion to $13.5 billion. Furthermore, Q3 adjusted EBITDA is expected to be in the range of $25 million to $75 million.

For FY2022, Marketplace GOV is predicted to be in a range of $51 billion to $53 billion, with adjusted EBITDA in the range of $200-$500 million.

DASH CEO’s Comments

Commenting on the recently completed acquisition of international food delivery platform Wolt, DoorDash CEO, Tony Xu, stated, “Joining forces with Wolt increases the size of our opportunity ahead and significantly enhances our talent. This should enable us to remain focused on superb product development and efficient execution as we seek to drive growth in local commerce around the world.”

Wall Street’s Take on Dash

Following Q2 results, Citigroup analyst Ronald Josey increased the price target on DoorDash to $129 (58.55% upside potential ) from $118 and reiterated a Buy rating.

The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 11 Buys and nine Holds. The average DoorDash price target of $104.64 implies a 28.58% upside potential to current levels.

Concluding Thoughts

Cautioning the investors, DASH management stated during the earnings that a “softer consumer spending environment” may be approaching in the second half of the year.

They even added, “We caution investors that consumer spending could deteriorate faster or to a greater degree than we anticipate, which could drive results below our expectations.”

DoorDash has lost over half of its market capitalization over the past year. Despite impressive revenue growth and recent stock price recovery, investors may choose to be on the sidelines based on the cautionary outlook.

Disclosure

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