| Author | Message | ||
     Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3545 Registered: 05-2011 Posted From: 65.35.45.47 Rating: N/A |
DASH DoorDash looks quite dashing as Q1 impact of restaurants reopening was not too bad, stock was ready for a bounce after sell-off (137.50 +22.02) DoorDash (DASH +19%) is looking quite dashing today following last night's earnings release. This is just the food delivery service's second earnings report since it made its IPO debut in December 2020. DASH reported a wider loss than expected in Q1; however, revenue nearly tripled yr/yr to $1.08 bln, nicely above the $990 mln consensus. Key metrics also performed well. A concern going into Q1 was the potential impact of on-site dining increasing as COVID restrictions started to lift and as vaccines started getting rolled out aggressively. DASH concedes that restaurant reopenings had a negative impact on new consumer growth, order rates, and average order value. However, the impact dealt to order volume was smaller than expected. DASH believes stimulus checks were partially responsible for this. While the Q1 impact of reopenings was smaller than expected, DASH expects the impact to grow through the summer as markets continue re-opening, stimulus dollars stop flowing, and DASH enters the seasonally slower warmer months. The impacts will vary by region. For example, Northern California, which is transitioning from a more closed state, will likely have a more severe impact while Florida will likely see less impact since it was never closed to the same degree as other markets. It's also comforting to hear that reopenings had a larger impact on behavior among newer consumers who order less often than it did on DashPass subscribers and consumers with higher order frequencies. DASH has really tried to get consumers to habitually use DoorDash, and the DashPass subscription plays a big part in that. Those subscribers are DASH's core customers, and it's good to see reopenings having less of an impact on their engagement with DASH's services. That will help DASH weather the re-opening storm. Another key growth strategy for the company involves considering ways to grow its services beyond restaurant delivery. New categories include convenience, grocery, alcohol, pets, and flowers and gifts. These new categories are still relatively small but grew 40% sequentially in Q1. We've been watching this area, and it's great to see it growing nicely. We cannot talk about the on-demand delivery space without mentioning consolidation. Uber (UBER) recently closed on its deal to acquire Postmates. Just Eat Takeaway.com (TKAYY) is still in the process of acquiring Grubhub (GRUB). Before that, DASH acquired Square's (SQ) Caviar app and Uber acquired Careem. The US market has consolidated quite a bit, which we think was necessary. The market now has three major competitors: DoorDash, Uber, and GrubHub. Hopefully, this will help stem aggressive promotional activity, which has been rampant. In sum, we think investors are not concerned about the wider-than-expected loss. The revenue upside and positive commentary more than make up for it. Also, the stock had fallen more than 25% in the past two weeks as investors shifted out of tech stocks. We think some of the drop was a reaction to restaurants reopening, so the cautious comments about this summer are likely priced in already. The stock was due for a bounce, and there was enough here to get investors excited. |