We value the stock at $130 per share, about 9x forward revenues. While recent moves such as advertising could help to an extent, we don’t think it changes the overall investment thesis for the stock. DoorDash’s biggest cost is related to its delivery partners and this number is variable, rising in proportion with the number of orders, giving the company little leverage. Moreover, we don’t think the unit economics of the food delivery business are particularly attractive.
Although the company posted rapid growth through the pandemic, growth rates are poised to slow meaningfully next year. The stock trades at a large 15.5x forward revenue, almost like a software-type business that has thicker margins and much more operating leverage. That said, we still think that DoorDash stock still looks fundamentally overvalued at its current market price of about $215 per share. See our analysis DoorDash Stock Chance Of Rise for more details. Per the Trefis Machine learning engine which analyzes price data for the stock over the last year, there is a roughly 71% chance of a rise in DoorDash stock over the next month. So is DoorDash stock poised to rise further in the near term. Investors anticipate that the move could open up a potentially lucrative revenue stream for the company, which remains loss-making. Moreover, DoorDash is also doubling down on the advertising business, launching its own ad platform and enabling restaurants to place ads that appear on top of search results on the DoorDash app. Firstly, there has been a broader recovery in technology stocks following a sell-off in late September and this likely helped DoorDash to an extent. There are a couple of factors driving the recent gains. DoorDash stock (NYSE: DASH) has gained almost 10% over the last week (five trading days), significantly outperforming the S&P 500 which declined by about 3% over the same period.
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