local food delivery logistics platforms, which is 24 percentage points more than our next closest competitor" as per data from Edison. According to the company's S-1 filing released in late 2020, DoorDash highlights that it has "50% category share among U.S. Thirdly, DASH dominates the market it operates in with much higher relative market share. In other words, DoorDash deserves to trade at a higher valuation as compared to some of its peers, as it is largely a pure proxy for food delivery. Similarly, Meituan earned slightly more than half or 56% of the company's FY 2019 revenue from its core food delivery business. For example, Uber generated a mere 11% of its fiscal 2019 (pre-pandemic) revenue from its delivery business segment, while the company's core mobility business & other segments contributed the remaining 89% of its top line in 2019. In comparison, some of DASH's peers only derive a certain proportion of their revenue from delivery-related businesses. This is supported by the fact that DASH highlighted in the company's fiscal 2020 10-K filing "the Company has determined that it operates in one reportable segment." Secondly, DoorDash does not suffer from a "holding company" or "conglomerate" discount, as the company earns the vast majority of its revenues from its food delivery business. This is one of the reasons for DASH's valuation premium over its peers. Notably, DoorDash has already managed to generate positive EBITDA in fiscal 2020 and thereby proving to the market that it knows the path to profitability unlike the company's peers. Market consensus sees DASH's other peers being loss-making at the EBITDA level over the next twelve months. Uber is forecasted by the sell-side analysts to generate positive EBITDA in the next one year but still achieve net losses over the same period. According to financial data sourced from S&P Capital IQ, DASH is the only stock among its peers (refer to the peer comparison chart in the prior section) that is expected to deliver both positive EBITDA and positive net profit in the next twelve months. But I view DoorDash's shares as fairly valued rather than overvalued because of three key reasons.įirstly, DoorDash is superior to its peers with regards to profitability. Is DoorDash Stock Overvalued Or Undervalued?Īs I highlighted in the preceding section, DoorDash's stock is expensive. As such, it is reasonable to refer to DoorDash stock as expensive. Separately, DoorDash also trades at consensus forward FY 2021 and FY 2022 EV/EBITDA multiples of 162 times and 111 times, respectively. In contrast, DASH's forward one fiscal year revenue growth is the lowest in the peer group. ( GRUB) ( OTC:TKAYF) ĭeliveroo plc ( OTCPK:DROOF) ( OTCPK:DLVEY) Īs per the peer valuation comparison table above illustrates, DoorDash is valued by the market at a significant premium to its peers in terms of forward Enterprise Value to Revenue multiples. Meituan ( OTCPK:MPNGF) ( OTCPK:MPNGY) ĭelivery Hero SE ( OTCPK:DLVHF) ( OTCPK:DELHY) Peer Valuation Comparison For DoorDash StockĬonsensus Current Fiscal Year Enterprise Value-to-Revenue MultipleĬonsensus Forward One Fiscal Year Enterprise Value-to-Revenue MultipleĬonsensus Current Fiscal Year Revenue Growth RateĬonsensus Forward One Fiscal Year Revenue Growth Rate Considering DASH's good share price performance in the past one year following its public listing, it is natural to question if DoorDash stock is expensive now. Bloomberg also refers to DASH, which was listed on NYSE on Decem, as "the largest food-delivery company in the U.S."ĭASH's last traded share price of $157.71 as of Decemrepresents a +55% increase as compared to the company's IPO price of $102. Is DoorDash Stock Expensive?ĭoorDash describes itself as "a technology company that connects consumers with their favorite local and national businesses in more than 7,000 cities across the United States, Canada, Australia and Japan" in the company's media releases. These factors help to validate my Neutral rating for DoorDash. More importantly, DASH has a long growth runway ahead with regards to expansion in new service categories and overseas markets, as it currently generates most of its top line from its home market and its core food delivery business. Although DASH is more expensive than its peers, this is reasonable since DoorDash is already profitable and boasts a relatively larger market share than its closest rival in the US food delivery market. ( NYSE: DASH).ĭoorDash's stock is fairly valued in my opinion. I have a Neutral or Hold investment rating for DoorDash, Inc. Tibrina Hobson/Getty Images Entertainment Elevator Pitch
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