Structurally it's nearly impossible to SHORT DASH. Still, the moon shot the company experienced yesterday was extraordinary, and we will likely look at that day as a once in life-time opportunity.
The IPO and current valuation for DoorDash has several potential implications:
- Encourages top-line growth over profitability
- Discourages an acquirer
- Encourages DASH to be a consolidator.
From these levels, it's hard to see a realistic DASH margin expansion story that could result in bottom-line profitability at a multiple comparable to peers. In reality, the only way to improve the profitability of the delivery sector is to see consolidation. This year has already seen the proposed merger of Just Eat Takeaway & Grubhub and Uber Eats & Postmates; the Food Delivery space is still likely in the early innings of consolidation. From here, it will be important that DASH proves that it can "solve" the last mile delivery profitability question. It has set expectations that can!
The DASH staggering overnight increase in valuation makes DoorDash a consolidator and needs to prove it can expand margins and show top-line growth in 2021-22, getting past the benefits from COVID-19. With COVID-19 pulling forward a substantial amount of demand in the Restaurant space, will DASH uses its currency to make a more significant play in the grocery delivery space?
The high mark so far for DoorDash is $195.50, and how long before it sees that level again? Yesterday all of the stocks related to food delivery or meal kits were moving higher – WTRH, GRUB, APRN. (Even the stocks across the pond moved higher TKAYF and HLFFF). The most fantastic chart of the day is where DASH's valuation fits into the Restaurant and Delivery space. Overnight, DASH has become the 4th most valuable company in the space, which can redefine how investors think about the "last mile."
