DoorDash shares climbed on Wednesday following the release of the company's fourth-quarter earnings report
Quick Facts:-
DoorDash shares surged Wednesday after the company reported its fourth-quarter results.
What Happened:-
The food delivery company reported revenue and earnings below market expectations for the last quarter.
Results Details:-
The San Francisco-based company said it saw sales growth of nearly 38% year-over-year during the last quarter.
Revenue rose to $3.96 billion, compared to $2.87 billion during the same period last year, but fell short of expectations of $3.99 billion. Earnings were 48 cents per share, below Wall Street's forecast of 60 cents per share.
Cramer labels DoorDash stock as a standout winner, even in light of a disappointing Q4
Why is this important:-
The significance of this lies in the fact that DoorDash achieved remarkable growth thanks to continued strong customer demand. This growth was reflected in a 32% year-over-year increase in the total number of orders, reaching 903 million. Furthermore, the value of transactions on the platform (GOV) increased by 39%, reaching $29.7 billion in the quarter, exceeding expectations of $27.65 billion.
The company completed its acquisition of Deliveroo in October, which significantly contributed to strong overall order growth. However, DoorDash's net profit was negatively impacted by the substantial investment in the UK food delivery platform. Profitability was also affected by increased costs per order.
The company announced guidance for adjusted EBITDA, projecting between $675 million and $775 million for the current quarter, below market estimates of $798.22 million.
How the stock moved:-
DoorDash shares rose 14.1% to $197.85 in after-hours trading, recovering some of the losses incurred before the quarterly earnings announcement. However, the stock remains down about 16% over the past month.
What to watch:-
Investors will continue to closely monitor the intensifying competition in the online food delivery market, especially as companies like Instacart and Uber Eats expand their partnerships and increase promotional offers, aiming to capture a larger market share.
Why Cramer Continues to Be Optimistic About DoorDash Stock
In a recent CNBC segment, Cramer referred to it as a "fulcrum quarter" for DoorDash Inc., signifying a critical turning point where the company shifts from a phase of uncertainty and decline to a period of sustained growth.
Despite concerns over its valuation, the former hedge fund manager contended that DASH stock is actually quite undervalued given its current growth rate and solid unit economics.
He emphasized that this quarterly report marks the moment when the business model has fully capitalized on its potential, demonstrating that DoorDash has evolved beyond being merely a delivery app into a logistical powerhouse with a lasting position in the market.
The acquisition of Deliveroo has the potential to boost DASH shares significantly
A significant element of Cramer's optimistic outlook revolves around what he refers to as the Deliveroo indicator.
DoorDash's expansion into London and other global markets via its acquisition of Deliveroo was initially seen as a potentially precarious decision, raising concerns about tying up capital in less predictable regions.
However, the host of Mad Money has pointed out that this international integration represents a notable strategic shift for the company, headquartered in San Francisco.
The acquisition has strengthened DoorDash's presence on the global stage, proving that its robust technology framework is capable of succeeding in varied and competitive markets.
By effectively managing the challenges of operating within the UK, DoorDash has demonstrated its ability to replicate its successful model abroad, transforming past investor uncertainty into a strong sign of growth potential and efficient scalability on a global level.
This development considerably enhances the appeal of DoorDash shares at their current valuation
How to play DoorDash Inc after Q4 earnings
Analyzing DoorDash Inc. after its Q4 earnings reveals several key takeaways for investors. A pivotal moment in the company’s strategy shift came through what Jim Cramer referred to as "conference call clarity."
The initial earnings report took a cautious approach, deliberately avoiding an overly optimistic tone and instead emphasizing the significant misses that unnerved trading algorithms. However, the conference call painted a more nuanced picture of the business trajectory. Management highlighted a notable trend: roughly 30% of DoorDash users are now placing orders from non-restaurant categories, such as grocery and retail.
This evolution in consumer behavior, coupled with CEO Tony Xu’s transparent long-term vision extending to 2026, helped reshape market sentiment around the stock. The detailed discussion of growth strategy repositioned DoorDash as a leader expanding its presence beyond restaurant delivery.
Cramer advised investors to pay close attention to the conference call, stressing that critical qualitative data—specifically regarding user engagement and increasing market penetration—demonstrated how DoorDash is gaining an edge over competitors while solidifying its dominance in the sector.