DoorDash's Global Ambitions Are Outpacing Rivals: Analyst

JMP Securities analyst Andrew Boone reiterated DoorDash Inc DASH with a Market Outperform and a $100 price target.

After analyzing 3P app data and search interest across Wolt's 25 international markets, Boone believes DoorDash is taking share overseas, helping to drive scale and improve DoorDash's international margins. 

To be clear, Uber Technologies, Inc UBER Uber Eats appears more established in global markets than DoorDash, while Bolt and Grab are also taking share, but with improving DAU/MAU metrics, DoorDash's international business appears to be creating healthy cohorts that can build over time, which was crucial for DoorDash's thesis at the time of the acquisition. 

DoorDash can continue to compound Gross Order Value (GOV) at elevated rates, given its culture of experimentation, execution, and long-term perspective. 

To that end, he defines DoorDash as a "core holding" and continues to believe that it offers the combination of an excellent management team and massive TAM. 

In contrast, the market underappreciated the near-term profitability. 

International has been a critical investment area for DoorDash. To that end, as Wolt grows market share and density, he believes unit economics and global profitability are improving as 3P data suggest Wolt is gaining share in Japan, Germany, Norway, Denmark, The Czech Republic, New Zealand, Kazakhstan, and Slovakia. 

While competition in Europe is likely more significant than in the U.S., Wolt's international markets address 380 million+ people who generate $13 trillion+ of GDP (vs. 332 million and $23 trillion of GDP in the U.S.) as international in aggregate represents a significant opportunity. 

The Street projects lower incremental EBITDA margins for DoorDash than Uber Eats in 2024. 

After Uber's incremental EBITDA margins (Y/Y incremental EBITDA divided by Y/Y incremental bookings) outperformed DoorDash's in 2022 and 2023, consensus estimates expect Uber to outperform DoorDash in 2024 which instead highlights the multiple levers DoorDash has under its control to manage EBITDA margins as new verticals and international markets scale while it continues to add density for U.S. restaurant orders and advertising ramps. 

DoorDash's profitability potential remains underappreciated. The analyst's price target multiple is a premium to peers, given DoorDash's TAM, execution, and best-in-class leadership. 

The analyst estimates 3Q/FY24 revenue of $2.09 billion/$8.40 billion, in line with the consensus.

Price Action: DASH shares traded lower by 3.27% at $76.37 on the last check Thursday.