DoorDash shares fell sharply in early trading Friday despite posting strong sales for the final three months of 2023. DoorDash stock analysts pinned the reaction on heightened expectations following a hot run for the company.
DoorDash said Thursday that it lost 39 cents per share on sales of $2.3 billion for the December quarter. On average, analysts projected the San Francisco-based company would post a loss of 13 cents per share on sales of $2.25 billion for the fourth quarter, according to FactSet.
However, DoorDash's adjusted EBITDA in the fourth quarter jumped 210% to $363 million, beating consensus of $356 million, according to FactSet. EBITDA refers to earnings before interest, taxes, depreciation, and amortization.
Revenue increased 27% year over year while DoorDash's net loss narrowed to $156 million from $642 million a year earlier. Still, the net loss was wider than consensus expectations coming into the report.
On the stock market today, DoorDash stock fell more than 12% to 110.41 in early trading.
DoorDash Sales: Good But 'Not Good Enough'?
For the current quarter, DoorDash guided for gross order value, or GOV, of $18.7 billion at the midpoint of its range. Analysts were projecting a GOV of $18.6 billion for DoorDash in the March quarter, according to FactSet. DoorDash defines GOV as the total dollar value for orders completed on its marketplace, including membership fees for DashPass.
DoorDash said its marketplace handled 574 orders for the last three months of December, up 23% from the same period a year earlier. The total value of those orders, or GOV, climbed 22%.
DASH stock has gained nearly 90% in the past 12 months, with shares especially hot in recent weeks. That may have contributed to the negative reaction in late trading.
Evercore ISI analyst Mark Mahaney said in a client note that DoorDash's fourth quarter earnings were "solid" but not as exciting as the company's previous third quarter report. Mahaney noted that year-over-year GOV growth slowed down from 24% growth in the third quarter.
With the stock already up 28% on the year, the drop "makes sense," he wrote.
"We would call this an expectations correction," Mahaney added. "But we continue to recommend DASH shares."
Oppenheimer analyst Jason Helfstein said in a client note DoorDash's guidance was likely "not enough for the bulls." But he reiterated an outperform rating for the stock and upped Oppenheimer's price target for the stock to 140, from 110.
"However, we expect DASH guidance will ultimately prove conservative, as it leans into incentives, international, and grocery," Helfstein wrote to clients on Friday.
DoorDash Stock: Technical Ratings
Prior to earnings, shares for DoorDash gained 5% to close at 126.27 in Thursday trading.
Coming into the report, DASH stock had an IBD Composite Rating of 93 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating.
Further, DoorDash's IBD Relative Strength Rating was 95 out of 99. The rating compares a stock's price movement over the last 52 weeks with that of others in IBD's database.
In addition, DoorDash stock had an Accumulation/Distribution Rating of A, which indicates more institutional buying than selling of shares.
