DoorDash Q1 preview: Where next for DoorDash stock?

When will DoorDash release Q1 2022 earnings?

DoorDash is scheduled to release first quarter earnings after US markets close on Thursday May 5.

DoorDash Q1 earnings preview

DoorDash is expected to have handled a record 394 million orders during the first quarter of 2022, up almost 20% from the year before, when order numbers more than trebled as people ordered-in more during the pandemic. Those orders are forecast to be worth a total gross merchandise value of $11.68 billion, up almost 18% from the previous year and toward the upper-end of the company’s guidance range.

Revenue is forecast to grow almost 28% to $1.38 billion from $1.07 billion the year before.

This could be one of the easiest quarters of the year. Although it is coming up against some tough comparatives from 2021, the fact the Omicron variant was still a problem in early 2022 means DoorDash may have reaped rewards if people stayed at home more. However, with Covid-19 restrictions largely gone and people heading back out to hospitality venues, growth could become harder to generate as the year goes on, but it is important to remember that demand looks set to be sustained well above pre-pandemic levels.

DoorDash ended 2021 with 25 million monthly active users and 10 million subscribers to DashPass, which get free delivery and other offers. DashPass subscribers yield lower margins on each order but they order more frequently as the company aims to grow its user base and expand its offering by expanding into non-food areas, such as groceries. DoorDash is competing with the likes of Uber and other delivery outfits to be the brand that brings everyday products to your door. DoorDash is by far the market leader in the US and has the most drivers on its books, with figures from Statista suggesting it has 59% of the market compared to Uber Eats at 24%.

Adjusted Ebitda – DoorDash’s headline earnings measure – is expected to dip 6.1% year-on-year to $40.4 million. That figure would be welcome considering DoorDash said it would be between breakeven and a $50 million profit.

The company is set to remain in the red at the bottom-line with the consensus pointing toward a quarterly net loss of $14.3 million, although that will be the smallest loss on record since DoorDash went public in late 2020. Notably, analysts believe DoorDash can hit a landmark moment in the second quarter and report its first adjusted net profit of $33 million.

In terms of DoorDash’s guidance for the current quarter, which will be a key factor in how markets react the results this week, Wall Street is looking for gross merchandise value of $12.1 billion and adjusted Ebitda of $82.5 million.

DoorDash has said it is aiming to deliver gross merchandise value of $48 billion to $50 billion in 2022, up from the $41.9 billion delivered in 2021. The company’s annual adjusted Ebitda target has a wide range of between breakeven and $500 million, which compares to the $289 million delivered last year. Wall Street currently anticipates Ebitda will come in at $292 million in 2022.

Notably, the outlook is likely to be tinkered with at some point this year as it does not reflect the acquisition of Wolt, which is expected to close some time before the end of June. Once completed, DoorDash plans to update its guidance for the year. The acquisition has significantly expanded DoorDash’s international reach considering Wolt has over 4,000 employees working in 23 countries.

Where next for DASH stock?

DoorDash shares swiftly collapsed from hitting an all-time high of $257 in November to a record low of $76 in March. Although the stock managed to brieflybreakout of the downtrend last month it has fallen back to trade at $82 today.

The closing-low of $76 needs to hold to avoid opening the door to unknown territory.

The first upside target is $93, a key level that has come into play on several occasions during the past two months, but it needs to recapture $100 to break out of the current downtrend. From there, it can target $116 before bringing the April-high of $130 back into its crosshairs. Notably, the 28 brokers that cover the stock are bullish and believe it can return to levels seen late last year with an average target price of $156.

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