![]() ![]() I would be more interested if the stock traded at $54 per share, representing 24 times forward contribution profits. Such a valuation does not appear reasonable in light of 30% projected forward growth, unless DASH manages to prove large operating margins in the future, but such a result seems unlikely considering the lack of profits in 2020. That multiple is even larger when compared against contribution profit, which stands at 60 times. We can see below that GAAP gross margin stood at 49.2% in the latest quarter, but contribution profit, which takes into account the advertising spend per order, stood at only 23.7%.īased on the latest quarter gross profits annualized, DASH trades at 29x gross profits. We can see below that DASH was unable to generate positive income in 2020 in spite of what should have been considered a blockbuster year. However, one should not be so quick to value DASH on the basis of revenues. At 15 times trailing sales, the stock might not look egregiously expensive in light of the rapid trailing growth rate and management's forecast for 33% gross order volume growth in 2021. With the stock down considerably from all time highs, a pressing question for readers may be if DASH stock is finally a buy. The valuation disconnect can be explained in part due to DASH's faster growth rate, but it is clear that DASH trades at a large premium to the sector, even after accounting for the difficulty in comparability with UBER. At recent prices, GRUB is trading at 3.8 times trailing sales - a large discount to DASH's multiple of 15 times trailing sales. GRUB agreed to be acquired by TKAYF for $7.3 billion last June. Inclusive of its rides business, UBER trades at less than 10 times trailing sales (I note that trailing rides revenues was depressed during the pandemic). What about valuation? Uber Eats is a subsidiary of UBER and thus does not have a public company valuation. I suspect that DASH's success has a lot to do with the apparently lower restaurant fees and anecdotally a more-friendly app interface. In the latest quarter, GRUB reported 48% top-line growth while UBER paced DASH with 224% delivery growth. For all three companies, the restaurant fee is lower if the orders are purchased directly on the restaurant's website. In comparison, GRUB charges a 10% base fee and a 20% marketing fee for a total 30% fee from restaurants. DASH is rather secretive about their exact restaurant commission fee structure, but it is estimated to be around 20%. ![]() How does DASH compare with food delivery peers? DASH states that their take-rate was 11.9% in the latest quarter, but that includes credits and refunds. DoorDash Comparison With CompetitionĭASH benefited from pandemic tailwinds to report strong top-line growth, with revenue growth accelerating above 200% during 2020. As we will see below, the intense competition has also impacted DASH's ability to generate consistent profits. GRUB stock performed poorly in large part due to " promiscuous customers," who have shown a knack for simply choosing the food delivery service with the lowest cost. It has been a tough ride for Grubhub ( GRUB) shareholders, as the stock is still 50% lower than all time highs as the company prepares to be acquired by Just Eat Takeaway ( OTC:TKAYF). It's worth noting that it hasn't always been easy for food delivery stocks. After peaking above $256 (intra-day pricing), the stock has fallen below its first day price, currently trading just above $140 per share. Since then, the stock has been taken on a rollercoaster. At the time, DASH was one of only three publicly traded food delivery companies in the USA. What Did DoorDash IPO At?ĭASH completed its initial public offering on Wednesday, December 9th, closing at $189.51 per share, up 86% from its IPO price of $102. In light of valuation, I rate shares a strong sell. The company saw revenue growth accelerated to above 200% in 2020, but is projecting a slowdown in 2021. DASH appears to be competing effectively in the food delivery market, as both its aggressive pricing and easy-to-use app have won the appetites of both customers and restaurants. Santiago/Getty Images News via Getty ImagesĭoorDash ( NYSE: DASH) is a recent IPO which has seen both strong growth in revenues as well as its stock price. ![]()
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