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Making Sense of DoorDash’s Newly Added Risk Factors

DoorDash (DASH) operates an online food ordering and delivery platform. Based in California, DoorDash has a global footprint with a presence in countries like Canada, Japan, Australia, and Germany.

For Q4 2021, DoorDash reported a 34% year-over-year jump in revenue to $1.3 billion and exceeded the consensus estimate of $1.28 billion. It posted a loss per share of $0.45, which improved from a loss per share of $2.67 in the same quarter the previous year but missed the consensus estimate of a $0.27 loss per share.

DoorDash recently partnered with Albertsons Companies (ACI) on an express grocery delivery program.

With this in mind, we used TipRanks to take a look at the newly added risk factors for DoorDash.

Risk Factors 

According to the new TipRanks Risk Factors tool, DoorDash’s top risk category is Finance and Corporate, with 32 of the total 85 risks identified for the stock. Ability to Sell and Tech and Innovation are the next two major risk categories with 15 and 14 risks, respectively. DoorDash has recently updated its profile with 12 new risk factors.

In November 2021, DoorDash agreed to acquire Europe-based food delivery provider Wolt for 7 billion euros in an all-stock transaction expected to close in the first half of 2022. DoorDash cautions that the transaction may depress its share price. It explains that Wolt shareholders may decide to sell the DoorDash shares they receive shortly after the transaction has been completed.

DoorDash tells investors that it may be required to pay 210 million euros in terminations fee to Wolt if they are unable to complete the transaction under certain circumstances. Further, DoorDash says that it will incur expenses related to the Wolt deal whether or not the transaction is eventually completed. 

DoorDash informs investors that it may be the target of securities class-action lawsuits as a result of its deal with Wolt. Even though such lawsuits may lack merit, defending against the claims could result in significant costs as well as divert management’s attention.

Finally, DoorDash cautions that the Wolt acquisition would increase its exposure to foreign currency exchange risk. It explains that Wolt operates in a number of countries and sales are sometimes recorded in local currencies. Those sales would need to be converted into U.S. dollars, which is DoorDash’s reporting currency. 

DoorDash’s stock has declined about 45% year-to-date.

Analysts’ Take

In February, D.A. Davidson analyst Tom White maintained a Hold rating on DoorDash stock but lowered the price target to $135 from $210. White’s reduced price target suggests still suggests 69.05% upside potential.

Consensus among analysts is a Moderate Buy based on 9 Buys and 7 Holds. The average DoorDash price target of $164.21 implies 105.62% upside potential to current levels.

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