DoorDash (DASH 1.36%) stands as the leading food delivery platform across the United States, captivating consumers with its innovative services. Since hitting a low in 2022 during the S&P 500 (^GSPC -0.39%) bear market, its stock has skyrocketed by an astounding 370%. This remarkable growth can be attributed to the company’s strategic expansion of service offerings, coupled with a significant increase in its global presence, positioning it as a formidable player in the food delivery industry.
For investors keen on capitalizing on DoorDash’s potential, a further 22% increase in stock value would see it regain its all-time high, which was reached during the tech boom in 2021. This raises an important question: Can the positive momentum continue? Here are two compelling reasons to consider purchasing shares, along with one cautionary note for prospective investors.
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Unlocking DoorDash’s Growth: Record Revenue Achievements
DoorDash has achieved a remarkable revenue milestone, generating an impressive $3 billion during the first quarter of 2025. This figure represents a significant 21% increase compared to the same quarter last year, marking the first time the company has surpassed the $3 billion revenue threshold. Such growth demonstrates the platform’s increasing popularity and effectiveness in meeting consumer demand.
Several factors contribute to DoorDash’s continuous revenue growth. Firstly, the company’s gross order value (GOV), which reflects the total dollar value of customer orders processed through its platform, reached a record high of $23.1 billion during the first quarter, indicating a year-over-year growth of 20%. This increase showcases the rising consumer preference for DoorDash’s services.
Secondly, DoorDash’s net revenue margin has shown a consistent upward trend over the past few years, reaching 13.1% this quarter, just shy of its record high of 13.5%. The net revenue margin indicates the percentage of GOV that DoorDash retains after compensating restaurants, retailers, and delivery drivers. A higher margin suggests that DoorDash is effectively enhancing efficiency within its logistics network or increasing its take rate (the fee it receives for fulfilling each order).
Moreover, DoorDash is pursuing growth through strategic acquisitions. Recently, the company announced a $3.8 billion deal to acquire Deliveroo, one of the largest food and grocery delivery services in the United Kingdom. In the same week, DoorDash revealed plans to invest $1.2 billion in acquiring SevenRooms, a software provider catering to the hospitality sector. This acquisition aims to enhance the marketing and operational capabilities of restaurants and hotels, allowing them to serve customers more effectively.
These recent acquisitions build on a series of significant deals in the past few years. For instance, in 2022, DoorDash acquired Wolt, which was among Europe’s largest food and grocery delivery services at the time, allowing DoorDash to accelerate its international expansion efforts across 23 countries. Despite these achievements, it’s important to note that DoorDash’s revenue growth has shown signs of deceleration in recent quarters, primarily due to management’s strategic shift towards reducing operating costs in favor of higher profitability. This cautious approach seems to be yielding positive results.
Capitalizing on DoorDash’s Success: Surging Profits Drive Growth
In the first quarter of 2025, DoorDash reported operating costs of nearly $2.9 billion, reflecting an 11.7% increase year over year. However, since revenue increased at a faster rate of 21%, the company saw a significant boost in its bottom-line profit. Consequently, DoorDash achieved a net income of $193 million, marking a notable turnaround from a $23 million net loss during the same period last year.
Historically, DoorDash has tended to grow its operating costs at a rapid pace, which often led to losses, as management prioritized customer acquisition in a highly competitive food delivery market. However, with DoorDash now commanding a dominant position in the U.S. market, boasting over 60% market share, and diversifying its offerings into groceries and retail, it has shifted its focus towards enhancing profitability.
Beyond the impressive net income reported for Q1, DoorDash has achieved over $2 billion in adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) over the past four quarters. This non-GAAP measure of profitability excludes one-off and noncash expenses, such as stock-based compensation, allowing investors to gain a clearer understanding of the cash generation capacity of DoorDash’s core business operations. Generally, businesses that demonstrate consistent profitability are more sustainable in the long run, providing management the flexibility to reinvest in growth initiatives such as marketing and research and development.
Evaluating DoorDash Stock: Caution Advised on Valuation Metrics
If there’s one reason that might discourage investors from purchasing DoorDash stock, it is the valuation. The company has yet to achieve consistent profitability on a GAAP (generally accepted accounting principles) basis, rendering the price-to-earnings (P/E) ratio ineffective for valuation purposes. However, investors can still assess DoorDash’s stock using the price-to-sales (P/S) ratio, which compares a company’s market capitalization to its trailing-12-month revenue.
Currently, DoorDash has a P/S ratio of 7.9, which is approaching its highest level in the past three years. This valuation places DoorDash at a significant premium compared to Uber Technologies (UBER -0.69%), which currently trades at a P/S ratio of only 4.3.
DASH PS Ratio data by YCharts.
While Uber Eats trails DoorDash in the U.S. food delivery market, Uber boasts the largest ride-hailing network globally, alongside an expanding commercial freight service. In the first quarter of 2025, Uber reported gross bookings of $42.8 billion, nearly double that of DoorDash’s GOV, with Uber generating almost four times the revenue, totaling $11.5 billion for the quarter.
This disparity suggests that DoorDash may not justify its high valuation when compared to Uber, given that Uber is a more diversified enterprise with significantly greater revenue streams. Furthermore, the advent of autonomous vehicles could enhance Uber’s long-term growth potential, positioning it as a more attractive investment relative to DoorDash.
Investors may find DoorDash stock appealing if they can commit to holding shares for five years or longer, providing the company ample time to align with its current valuation. However, for those seeking short-term gains, it may be prudent to exercise caution, as the potential for immediate upside appears limited over the next twelve months.
