DoorDash Stock Is Soaring on the First-Quarter Report. Here’s What Wall Street Is Saying.

It was a classic beat-and-raise quarter, one which allayed fears that DoorDash’s business would crumble as the economy reopens—although it comes just a few days ahead of a post-initial-public-offering lockup expiration that will free up more than half of the company’s outstanding shares.

DoorDash posted first-quarter revenue of $1.1 billion, up 198% from a year earlier, and ahead of the Street consensus forecast for $999 million. Marketplace gross order value, or GOV, was $9.9 billion, up 222%, and well ahead of the Street consensus forecast for $9 billion. Total number of orders were 329 million, up 219%. Adjusted Ebitda, or earnings before interest, taxes, depreciation, and amortization, was $43 million, ahead of the Street consensus forecast of $23 million, and up from a loss of $70 million a year ago.

Guidance also was impressive. For the second quarter, DoorDash sees adjusted Ebitda ranging from breakeven to positive $100 million; the $50 million midpoint, would be ahead of the old Street consensus estimate for $22 million. For the full year, DoorDash sees adjusted Ebitda ranging from zero to $300 million, with the Street consensus estimate at $120 million. DoorDash sees GOV for the quarter in the range from $9.4 billion to $9.9 billion, the midpoint of which is down modestly on a sequential basis but ahead of the Street consensus estimate for $7.7 million. For the full year, DoorDash projects GOV of $35 billion to $38 billion, above the Street consensus estimate for $32.6 billion.

Wells Fargo analyst Brian Fitzgerald responded to the report by upgrading DoorDash stock to Overweight from Equal Weight, and raising the price target to $170 from $165. He thinks the strong quarter and guidance will help offset the pressure on the stock that came from investors rotating out of growth and into value stocks. (At yesterday’s close, the stock had fallen 55% from its 52-week high.) He thinks the current valuation—about 8 times estimates 2022 revenue—is sustainable in the context of projected annual GOV growth of 15% through 2028.

Truist Securities analyst Youssef Squali likewise raised his rating on DoorDash stock to Buy from Hold, and lifted the target price to $185 up from $180. He notes that the company faces tough second-half comps, and that investments are likely to keep margins in check for the short-to-medium term, but that the sharp pullback in the stock offers “a compelling entry point.” He adds that DoorDash “continues to grow faster than peers and gain share, even as it leads with over 50% total market share in the U.S.” And he adds that “the reopening headwind may not be as strong as feared.”

But some skepticism on the stock remains. 

J.P. Morgan analyst Doug Anmuth kept his Neutral rating and $160 target, while noting the strong quarter and the company’s growing confidence in the business heading into the re-opening. “DoodDash continues to execute well, strengthening its leadership position in the core food delivery vertical while expanding into new verticals, including establishing leadership position in convenience less than 1 year into launch,” he writes. But he also points out that the stock is heading into a lock-up expiration next Tuesday that will free up 54% of the company’s shares for trading—about 174 million shares.

Oppenheimer analyst Jason Helfstein maintained his Perform rating on the stock, and suggests investors interested in the sector instead choose Uber Technologies (UBER), trading at 4 times his 2022 revenue forecast, rather than DoorDash at 7.4 times, given exposure to both delivery and mobility; he also notes coming “difficult year-over-year comps” and the pending lock-up expiration.

Evercore ISI’s Mark Mahaney has similar concerns, and keeps his In Line rating. “We remain on the sideline due to valuation, the pending lockup expiration, and limited international [and] non-food adoption,” he writes. “ We fully acknowledge the stock has de-rated from about 13 times 2022 sales at its peak to 8 times currently, but valuation remains rich versus other food delivery…and ride-sharing [stocks].” He also notes the coming lockup, and points out that the company has neither seen widespread adoption of non-food deliveries nor shown a clear path to international expansion. “All in, we think DoorDash is a strong fundamental asset, but the current risk/reward setup is relatively balanced in our view.”

Write to Eric J. Savitz at [email protected]