After a big year for DASH stock, DoorDash is ready to invest in efforts to push beyond its core business of restaurant delivery in the U.S., its chief executive told the Financial Times.
"The two largest areas of investment are expansion and penetration outside of the U.S., as well as the same outside of restaurants," DoorDash Chief Executive Tony Xu told the Financial Times in an interview published Monday.
The San Francisco-based DoorDash, which operates in more than 20 countries, competes with Uber and others for food delivery. But it has also been adding delivery options for grocery and convenience-store items, competing with companies such as Instacart.
On the stock market today, DASH stock shed 2.5% to close at 96.46.
DASH Stock: 106% Gain In 2023
DoorDash stock bounced back from a rough 2022 to gain 106% in 2023. However, shares are still well off a November 2021 peak near 245.
Further, the food and grocery delivery company has tallied $6.3 billion in sales through the first nine months of the year, up 33% from the same period in 2022.
Moreover, DoorDash has generated nearly $900 million in free cash flow in the 12-month period ending in September, the Financial Times noted. That gives the company room to spend.
However, Xu told the publication that DoorDash will keep a "high bar" for acquisitions. Its most recent deal was a $3.5 billion purchase of Finnish delivery startup Wolt that closed in 2022, which expanded DoorDash's European operations.
"We're not investing into every single project at the maybe levels that we like . . . but we're always looking to reinvest," Xu told the publication.
International Competition
Despite the big gains for DASH stock last year, analysts have monitored the company's expansion efforts with caution. About 54% of analysts following DoorDash are neutral on the stock, compared with 43% who hold buy ratings, according to FactSet.
Wedbush analyst Scott Devitt, for instance, gave a neutral outlook for DoorDash this year in a client note Dec. 27. The Wedbush analyst likes the "long-term domestic opportunity" for the company. But Devitt said there is execution risk as DoorDash takes on more crowded categories and international markets with larger peers.
Meanwhile, DASH stock has recently been trading just above its 21-day moving average, according to IBD MarketSmith. That's after shares surged late last year following better-than-expected third-quarter earnings published Nov. 1.
DASH stock is on the IBD 50 premier growth-stock list. DoorDash shares are also on IBD's Tech Leaders list.
