DASH - DoorDash: Poised To Seize Market Share With Multiple Growth Drivers

2024-05-29 08:21:45 ET

Summary

• DoorDash's key competitive advantages are its strong market leadership and robust delivery infrastructure in the restaurant industry. This allows the company to seize share away from competitors.
• The company is well-positioned for long-term growth with favorable market tailwinds, international expansion, new verticals, and advertising businesses. Each has reported healthy positive unit economics.
• Quantitatively, DoorDash has reported strong financial performance, including improvements in gross margin, reduced operating losses, and increased free cash flow.
• Based on my forward 1-year projection of 18% revenue growth, DoorDash is priced at forward EV/sales of 3.9x. This valuation is well justified due to its market leadership and robust delivery infrastructure.
• I rate the company as a buy.

Overview and Investment Thesis

DoorDash (DASH) operates as a marketplace business connecting consumers, delivery riders, and merchants. Its competitive advantage is rooted in its market leadership in the U.S. food delivery industry, where it holds a commanding 66% market share . This extensive network of supply and demand, along with strong brand recognition and network effects, is difficult for competitors to replicate and is driving robust growth in total orders and gross order volume (GOV) as it takes market share away from competitors....

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