door dashThe company’s stock price plummeted toward its worst trading session in history as investors rejected the company’s aggressive spending strategy.
The food delivery platform said it plans to spend “hundreds of millions of dollars” next year on new product initiatives such as autonomous delivery and a new global technology stack.
While these plans will improve the company’s products globally, they will have “direct and opportunity costs” in the short term, DoorDash said.
CEO Tony Xu defended the company’s spending decisions on an earnings call with analysts, saying DoorDash continues to operate its business as usual to solve customer problems in the highest quality manner.
“Our track record in investing in the areas in which we currently operate suggests that we have had some success in iterating on this strategy, and we are doing this now to position ourselves for future growth,” he said.
In recent months, DoorDash has spent significant amounts of money to explore new markets and increase customer choice as it battles industry competitors such as: UberAnd there are growing concerns about a slowdown in consumer discretionary spending.
Earlier this year, the California-based company acquired restaurant booking platform Seven Rooms for $1.2 billion and British food delivery company Deliveroo in a deal worth $3.9 billion. Doordash also launched an autonomous delivery robot known as Dot and a new DashMart fulfillment service for retailers in September.
Wells Fargo analyst Ken Gawlerski said the length and scope of these investments remains a key issue for the company’s stock.
“In our view, this is one of the best operational management teams in the space, and long-term investors are likely to continue supporting it through this period,” he said. “However, given the inconsistent disclosures, we believe patience may be required.”
DoorDash’s third-quarter profit was 55 cents per share, below LSEG’s estimate of 69 cents per share. Revenue rose 27% year over year to $3.45 billion, beating Wall Street’s expectations of $3.36 billion.
The company expects fourth-quarter adjusted EBITDA to be between $710 million and $810 million, with a median of $760 million. Analysts polled by FactSet had expected $806.8 million.
DoorDash expects Deliveroo’s adjusted EBITDA to increase by $45 million in the fourth quarter and approximately $200 million in 2026.
The stock is up more than 20% this year.
DoorDash’s year-to-date stock price chart.
