DoorDash sees solid, and growing, revenues for its food delivery business, suggesting that at-home dining is unlikely to wane in the post-pandemic era.
DoorDash shares (DASH) – Get DoorDash, Inc. Class A Report shares rocketed higher in pre-market trading after the food delivery specialists topped Wall Street forecasts for its fourth quarter earnings and said demand is likely to remain firm even as the pandemic wanes.
DoorDash said December quarter sales rose 34% from last year to a Street-beating $1.3 billion, thanks in part to an active customer base of around 25 million, a level that is around 2.5 times higher than prior to the pandemic. Paid members also exceeded 10 million, DoorDash said, more than double the level prior to its December 2020 IPO.
The group said gross orders for the three months ending in March would rise by around 3.6% to $11.6 billion, helping it produce a modest profit of around $250 million.
Last week, DoorDash rival Uber Technologies (UBER) – Get Uber Technologies, Inc. Report said delivery revenues, which includes Uber Eats, rose 78% to $2.42 billion over the three months ending in December.
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“I think we’ve put to rest, I think, this question of what happens to demand as diners go back and eat inside restaurants (in the post-Covid era),” CEO Tony Xu told investors on a conference call late Wednesday. “It’s very possible to eat inside of a restaurant and get delivery because we eat three times or more maybe per day, and that’s over 100 shopping moments per month. And I think that’s kind of what we’ve seen certainly in the restaurant delivery business.”
DoorDash shares were marked 25% higher in pre-market trading to indicate an opening bell price of $118.70 each, a move that would still leave the stock nursing a six-month decline of around 36.2%.
“While other sectors of our coverage universe have seen a reduction in demand with the re-openings, DoorDash’s greater selection, convenience, and value are proving resilient,” said JMP Securities analyst Matthew Condon, who carries a ‘market perform’ rating with a $200 price target on the stock.
“With unquestionable execution, and as we believe it remains early days for delivery as DoorDash’s 2021 GOV accounts for 5% of restaurant food sales, the company is less than 10% penetrated for U.S. users,” he added. “Non-restaurant verticals are extending its service (and) we believe it can sustain elevated growth rates beyond the pandemic.”
