S-Curve Capital
Long/Short Portfolio Manager, TMT
DoorDash's core business is fine and its investments make sense; the problem is a tough narrative, so below $160 it is probably fine to own for anyone not judged on monthly performance. The tape is unforgiving: investors keep asking about FY27 though management would never guide that far out, and investor relations has brushed off calls for an analyst day and tough questions on the investment cycle. x.com x.com x.comÂ
DoorDash's clear accumulation makes its continued selloff look unjustified. The stock is still falling despite that buying. x.comÂ
American demand for delivery makes DoorDash hard to bet against despite reports it may acquire Instacart. Analysts target over $250 against a $169 share price. x.comÂ
DoorDash's EPS beat is mostly tax-driven, and the apparent discount on its Instacart purchase will take time to matter. Despite a strong quarter, $1.06 GAAP EPS at a 3.9% tax rate would be about $0.85 at 23%, roughly in line with consensus; organic GOV growth stayed at 23%. DoorDash is paying 11.7x annualized Q3 EBITDA for Instacart versus its own 16x multiple, but the $17B deal won't close until late 2027 or 1H28, and management plans to reinvest more than 100% of first-year synergies. x.comÂ
DoorDash is building the local infrastructure layer of a three-sided marketplace for all of local commerce, so heavy investment is expected and does not break the thesis. It is an incredible growth business run by excellent operators with an unlimited addressable market. Selling on worries about competitive intensity, earnings quality or the direction of the numbers misreads that. x.com x.comÂ
DoorDash is a bet on human laziness, which is foolproof. Per The Kobeissi Letter, the stock jumped over 15% after 33% year-over-year revenue growth and strong guidance. x.comÂ
DoorDash may be seeking acquired growth because its market share looks to have peaked. Its interest in buying Instacart looks desperate given its poor platform, adding to the short-DoorDash side of the long-Uber pair. x.comÂ
DoorDash should recover from its post-earnings dip given strength in orders, revenue and EBITDA. Q2 marketplace GOV rose 36% to $33.1B, revenue was $4.45B versus $4.34B expected, adjusted gross margin 54.2% versus 51.8% and adjusted EBITDA $914M versus $843.4M. Q3 EBITDA guidance of $950M-1.1B brackets the $982.2M estimate. EPS of $0.46 missed $0.48 and free cash flow was light, on higher costs tied to more orders. x.comÂ
DoorDash's investment in and partnership with ALSO, which per DoorDash's Stanley Tang builds some of the most compelling purpose-built EVs, advances its pursuit of autonomous delivery at scale and is bullish for both DoorDash and Rivian. Tang will join ALSO as a board observer. x.comÂ
DoorDash faces a weak long-term setup because many people hate the service and don't have to use it, so they would switch as soon as a viable alternative appears. The stock is barely above its IPO price from almost six years ago; buying the 2022-2023 lows paid off, but that happened across similar names. DoorDash can still do well long term. x.comÂ
DoorDash handing an existing customer a $10 discount offer is probably not a great sign for shareholders, with the stock already down 28% this year. x.comÂ
