Having already doubled in the past 12 months, DoorDash stock is pushing higher after a strong second-quarter report. A positive sales outlook for U.S. food-delivery market leader underscored steady demand for what analysts call the convenience economy.
"Food is the most resilient category and most sought-after category for convenient consumption," Chief Executive Tony Xu told analysts Wednesday. "It is the activity we engage with three times a day, 20 to 25 times a week and more than 100 times a month. Then you include all of the shopping categories and use-cases outside of food DoorDash has been pursuing for the last 5 years, I think you get the setup for some of the markets and the market expansion that you've seen."
DoorDash's revenue jumped 25% to $3.28 billion in Q2, compared with analyst estimates of $3.16 billion. That's the money DoorDash collects from the $24.2 billion in gross order value on its marketplace during the June quarter, which marked a 23% increase from a year earlier. Revenue growth accelerated from the 21% rate that DoorDash posted in Q1.
The San Francisco-based DoorDash earned 65 cents per share for the quarter, compared with a loss of 38 cents per share a year ago. Analysts polled by FactSet were forecasting earnings per share of 44 cents.
On the stock market today, DoorDash stock gained more than 3% to 261.90. Shares returned to record-high territory earlier this month for the first time since November 2021.
DoorDash Touts U.S. Restaurants Strength
DoorDash said the quarter showed "notable strength" in U.S. restaurant ordering. Growth for the DashPass rewards offering contributed to an increased average order frequency, the company added in its earnings report. Total orders increased 20% year-over-year to 761 million.
For the current quarter, DoorDash guided for gross order value of $24.45 billion, based on the midpoint of its range. Analysts were looking for $23.83 billion in gross order value in the September-ended period, according to FactSet.
Analysts were impressed by the growth.
"The simple story is somehow, someway, the core U.S. restaurant business is still getting better, with broad acceleration," RBC Capital Markets analyst Brad Erickson wrote. Erickson reiterated an outperform call.
Meanwhile, Morgan Stanley analyst Brian Nowak wrote Thursday that food delivery is becoming a "staple consumer behavior" — to the benefit of DoorDash and the rival food delivery business from Uber Technologies. He rates both stocks overweight, or buy.
"We have written about consumers' increased focus on convenience over the past year and see this continuing to play out as the products improve," Nowak wrote. "If growth continues to compound, in our view it speaks to how these assets (DoorDash/Uber Eats) are likely undervalued, relative to their growth durability."
DoorDash Stock Up 54% This Year
The results appear set to extend a strong rally for DoorDash stock. Shares had gained 54% this year and 110% in the past 12 months.
Coming into the report, DoorDash stock had a best-possible IBD Composite Rating of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
