Breakingviews - Capital Calls: DoorDash is overstuffed

  • 2/26/2021
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SERVED TOO HOT. DoorDash has something any food-delivery service would want: access to a huge captive audience of eaters stuck at home. The $50 billion company said on Thursday that fourth-quarter sales rose 226% year-over-year to $970 million. The U.S. market leader will, however, find it tough to keep up its scorching growth when customers can once again eat out comfortably. About half of American adults plan to dine out in the coming months, according to a National Restaurant Association survey. Branching into subscriptions may help, but competition is already intense thanks to Uber Technologies’ Uber Eats service and Grubhub. And customers aren’t loyal, as DoorDash Chief Executive Tony Xu noted. Since the 86% first-day trading pop following its initial public offering in December, the company’s shares have declined more than 15% as of New York morning trade on Friday. Its enterprise value though is not far off 15 times the next 12 months’ estimated sales, according to Refinitiv data. That’s higher even than Chinese food-delivery giant Meituan, which unlike DoorDash is profitable. Fingers may get burned. (By Jennifer Saba)

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