DoorDash (DASH) Down 3.3% Since Last Earnings Report: Can It Recover?

It’s been about a month since DoorDash, Inc.’s last earnings report. (DASH). Shares have lost about 3.3% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is DoorDash waiting for a breakout? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

DoorDash reports first-quarter loss, beating revenue estimates

DoorDash reported a GAAP loss of 6 cents per share in the first quarter of 2024, narrower than the year-ago quarter’s loss of 41 cents.

Revenue increased 23.5% year-over-year to $2.51 billion. Strong performance in total order volume and market management, as well as improved logistics efficiency and growing advertising contributed to growth.

DoorDash’s first-quarter success was further boosted by growth in new verticals, particularly in the grocery segment, which experienced triple-digit year-over-year growth.

The quarter in detail

In the first quarter of 2024, total orders increased year-on-year by 21% to 620 million. This number surpassed the Zacks Consensus Estimate by 2.35%.

The GOV marketplace grew 21% year-over-year to $19.2 billion. This number surpassed the Zacks Consensus Estimate by 2.30%.

Adjusted gross margin was 48.7% compared to 49.1% reported in the year-ago quarter.

The premium margin was 29.9% compared to 26.2% in the same quarter last year.

In the quarter, adjusted sales and marketing expenses increased 1.5% year-over-year to $473 million.

In the first quarter, adjusted research and development expenses increased 24% year over year to $160 million.

Adjusted general and administrative expenses increased 10% from year-ago quarter levels to $220 million.

Adjusted EBITDA was $371 million compared to prior-year quarter adjusted EBITDA of $204 million.

Balance sheet and cash flow

As of March 31, 2024, DoorDash had $4.49 billion in cash and cash equivalents and short-term marketable securities compared to $4.07 billion as of December 31, 2023.

First quarter operating cash flow was $553 million compared to fourth quarter 2023 cash flow of $485 million.

First-quarter free cash flow was $487 million, up from $398 million in the fourth quarter.

Conductivity

DoorDash expects Marketplace GOV to reach $19-19.4 billion in Q2 2024.

Adjusted EBITDA is expected to be in the range of $325 million to $425 million.

How have estimates changed since then?

It turns out that the estimate review has been trending downward over the past month.

As a result of these changes, the consensus estimate moved by -52.54%.

VGM results

At this point, DoorDash has a great Growth Score of A, although it lags well behind its Momentum Score of D. Plotting a somewhat similar path, the stock is given an F on the value side, putting it in the bottom quintile for this investment strategy.

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, DoorDash carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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