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DoorDash Inc. shares soared Friday, after the company signaled that its business, which skyrocketed during the COVID-19 pandemic, may thrive beyond it.
The delivery app and platform company reported Thursday that its first-quarter gross order volume more than tripled and revenue nearly tripled. Addressing concerns about its business as pandemic restrictions ease, company executives pointed to, among other things, growth in non-restaurant initiatives.
DoorDash
DASH,
shares were trading near their intraday high of $146.43 and rose as high as 25% Friday before ending the day up more than 22% at $141.07. It was the best single-day percentage gain for DoorDash stock since its debut late last year, when shares jumped more than 85%.
“DoorDash’s goal of building a marketplace and a broader platform for delivery across [geographies] is well under way,” said analysts at Truist Securities, who upgraded their rating on the stock to buy and raised their price target from $180 to $185.
Likewise, Wells Fargo analysts upgraded their rating on the stock to overweight and raised their price target to $170 and said, “The bear case predicated on a [year-over-year] contraction in [gross order volume] has become dubious: We think the stock has bottomed out.” They cited the company’s guidance for expected growth in the second quarter and full year.
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DoorDash raised its full-year outlook for gross order volume to between $35 billion and $38 billion and Ebitda net income to between $0 and $300 million.
While acknowledging the company’s strong first quarter, some analysts are being more tempered.
“We come away incrementally positive on DoorDash shares, but remain on the sidelines into the final lockup expiration next Tuesday (5/18), which we believe will unlock ~54% of basic shares, or ~174M shares,” JPMorgan analysts wrote.
UBS analysts say the pandemic recovery is just beginning: “Aligned with [management] commentary of [continued] uncertainty, however, the pace/cadence of demand (order frequency & new user growth) amidst a number of potential headwinds (reopening, seasonality, etc.) & how user retention will progress thru ’21 will remain a key debate… we see DASH in the early innings of a transformation beyond food delivery.”
On regulatory issues, many analysts echoed the company’s upbeat take.
JPMorgan analysts: “In 1Q, price controls had a $31M negative impact on revenue, but certain cities like Chicago, Kansas City, & Cincinnati are already pulling back on commission caps.”
They also wrote that “we expect a more collaborative approach on both the federal and state level to determine employment classification going forward.” That was in line with DoorDash Chief Executive Tony Xu’s expressed optimism during the earnings call, when he said the company could work with President Joe Biden’s administration on gig worker classification issues.
Mizuho Securities analysts said they believe the passage of Proposition 22 in California last year, which allows DoorDash and other gig companies to continue treating their delivery workers and drivers as independent contractors, “sets a positive precedent” for the company’s business model.
Shares of DoorDash have fallen nearly 33% from their all-time closing high of $215.16 on Feb. 10, 2021, and are up about 1.7% year to date, as the S&P 500 index
SPX,
has gained 9.5%.
