As the company grows, I would not be surprised if gross margins improve due to better efficiency. It makes sense because DoorDash is providing neither the ingredients for the food nor the transportation for the worker. The FinancialsĭoorDash Historical Income Statements (TIKR) Note: One interesting side note is that the same phenomena occurs in bond ownership – the longer the duration, the more sensitive its value is to a change in interest rates. Simply focusing on top line growth in a higher rate environment, (but also, any environment) is an insufficient bull thesis for share appreciation. DoorDash’s sales are irrelevant without some prospect of bottom-line profitability. The further cash flows are pushed into the future, the less they are worth today when rates are increasing. This methodology, flawed as it is even when rates are low, becomes even more problematic when rates rise. This popular methodology of “valuing” companies based on sales is typical in a low interest rate environment where investors happily put off the bottom line if it will be higher in the future. Many analysts point to the increased revenue derived from these expansions as a point of strength and catalyst for the stock price. Much of the bull case for DoorDash is centered around its expansion into grocery delivery and international markets. For Dashers: provides a flexible way to earn money.For consumers: provides a platform for conveniently getting food without the need to pick it up or wait in line.For merchants: provides a platform to advertise and facilitate convenience for customers (which is a huge factor in getting sales).

Here is a brief overview of how DoorDash provides value to its primary constituents: The problem lies in making that type of business profitable, but we will get into that shortly. Value PropositionĭoorDash’s value proposition is undeniable as there is a huge market for meal delivery services. On the consumer end, revenue is generated via service and delivery charges. On the merchant end, DoorDash has several services that enable businesses to fulfill demand via DoorDash’s platform. The company has over 32 million users and over 15 million memberships of its subscription services: DashPass and Wolt+. Steve Jennings/Getty Images Entertainment Business OverviewĭoorDash ( NASDAQ: DASH) is a meal delivery service company which offers to serve the needs of three primary groups: merchants, consumers, and workers (“Dashers” as the company calls them).

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