Shares of DoorDash dropped in extended trading Wednesday after the food delivery service reported fourth-quarter results that fell short of Wall Street’s expectations. The stock was down approximately 9% following the earnings release.
The company posted adjusted earnings of $0.48 per share, which was below the $0.55 per share that analysts had forecast. Revenue also came in slightly lower than expected, at $3.96 billion compared to estimates of $4.0 billion.
Despite the misses on the top and bottom lines, the company did report some positive metrics. Gross order volume, which measures the total value of all transactions, exceeded expectations. Total orders also beat forecasts, coming in at 903 million against an anticipated 888 million.
However, investor attention was also focused on the company’s outlook. While the forecast for first-quarter gross order volume was above expectations, the outlook for adjusted EBITDA fell short of what analysts were hoping to see.
The negative reaction adds to a challenging period for the stock, which was already down about 20% over the past year and nearly 25% for the current year prior to this report. Analysts have been looking for signs that order trends are improving without being overly reliant on promotional incentives. They are also watching for continued proof that newer initiatives, such as advertising and expansion into categories like grocery delivery, are gaining traction.
Some analysts suggested the recent sell-off might have been overdone, noting that the company’s extensive network of delivery workers and strong restaurant demand provide a solid foundation. They also pointed out that the business faces limited risk from the rise of artificial intelligence, given its reliance on human delivery personnel.
Moving forward, investors will be listening for updates on the company’s international operations and its progress in expanding beyond restaurant meals into other areas like retail and groceries. The key will be how effectively DoorDash can keep users engaged on its platform and willing to pay for its subscription services.
