MW DoorDash's stock rallies as demand forecast tops expectations

By Bill Peters

'The total scope of local commerce is still well beyond what we serve today,' online food-delivery company says

Food-delivery app DoorDash Inc. on Tuesday forecast a key demand metric to come in above Wall Street's expectations for the first quarter, as it adds more grocery stores to its platform to complement its core restaurant business.

DoorDash shares $(DASH)$ were gaining more than 7% in after-hours trading.

The company, which delivers food from restaurants and other items from retailers, said it expected marketplace gross order value - or the total dollar value of orders made on the platform - to be between $22.6 billion to $23 billion in the current first quarter. Analysts polled by FactSet expected $22.41 billion.

In the fourth quarter, DoorDash earned 33 cents a share. Revenue increased 25% year over year to $2.9 billion. Gross order value rose 21% year over year to $21.3 billion.

Analysts polled by FactSet expected DoorDash to report fourth-quarter earnings per share of 34 cents, on $2.84 billion in sales, with gross order value of $20.93 billion.

"Entering 2025, we plan to continue to focus on creating incremental improvements in operational efficiency and reinvesting back into the business to increase our scale and expand our long-term profit potential," management said in the company's earnings release. "We believe we have clear pathways for investment in several areas of our business that we believe will allow us to generate strong returns and compound our value and impact."

"At the same time, the total scope of local commerce is still well beyond what we serve today and we are exploring a number of new initiatives that we hope will develop into valuable services for consumers, merchants, and Dashers," the company added.

DoorDash has been expanding its delivery services to bigger grocery stores, like Wegmans, and other large retail chains like Home Depot Inc. $(HD)$ That expansion has taken place amid a wave of price increases for consumers - particularly at restaurants, which make up DoorDash's core business.

Chief Executive Tony Xu, during DoorDash's earnings call in October, said that once customers got used to ordering groceries on DoorDash, they tended to order more each time the used the app. Growth in the company's restaurant segment, Chief Financial Officer Ravi Inukonda said in October, "has actually been very stable for the last few quarters."

Ahead of the results, Mizuho analysts said they expected an easier environment for DoorDash and other gig-economy platforms.

"Industry data suggests gig-economy services demand should remain resilient with moderating inflation and continued favorable unit economics," they said. "We expect gig-category leaders in ride-sharing $(UBER)$, food delivery (DASH) and grocery delivery [Instacart] to be well positioned for share gains."

-Bill Peters

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February 11, 2025 16:33 ET (21:33 GMT)

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