DoorDash stock fell Tuesday after a busy morning of announcements that included first quarter results and deals to acquire both U.K.-based food delivery company Deliveroo and restaurant-focused software firm SevenRooms. DoorDash's Q1 revenue came in slightly below expectations.
The deals come at a time that tariffs have raised concerns about consumer spending slowing. But DoorDash Chief Executive Tony Xu told analysts Tuesday that the company is "not seeing any effects" yet demand on its food and grocery delivery apps. DoorDash forecasted stronger order demand for the current June-ended quarter than previous Wall Street estimates.
Still, the acquisitions paired with a light Q1 revenue mix might have spooked some investors. DoorDash stock closed down by 7.4% at 190.11 on the stock market today. The slide cools a hot start to the year that had seen DoorDash rally more than 22% entering Tuesday. DASH stock fell back below a 201.03 double-bottom buy point cleared last Friday.
DoorDash Q1 By The Numbers
The San Francisco-based DoorDash also said that it earned 44 cents per share on sales of $3.03 billion for the March-ended quarter. That beat Wall Street expectations for earnings of 39 cents per share but was slightly lower than the $3.1 billion in sales analysts previously forecasted, according to FactSet.
Sales increased 20% year-over-year while the company swung to the earnings from a loss of 6 cents per share from the same quarter a year earlier.
DoorDash said in its news release that consumer demand has "remained strong." The company expects gross order value on its app to reach $23.5 billion for its June-ended quarter, based on the midpoint of its guidance range. That was better than the $23.3 billion forecasted by analysts, according to FactSet.
However, the company's projected adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $625 million, at the midpoint, missed Wall Street's expectations of $639 million.
Meanwhile, the total value of orders placed on DoorDash's marketplace grew 20% year-over-year to $23.1 billion. That was ahead of estimates for $22.9 billion. That value came from 732 million total orders, up 18% year-over-year.
Double-Dashing Acquisitions
DoorDash announced it would spend $3.86 billion to acquire U.K.-based Deliveroo, confirming an offer that was disclosed by Deliveroo late last month. In a less anticipated move, DoorDash announced separately that it would buy New York-based restaurant technology company SevenRooms for $1.2 billion. The deal for the OpenTable competitor allows DoorDash to offer merchants "new tools to grow in-store and delivery sales," according to the company announcement.
DoorDash stock analysts were mostly positive on the potential Deliveroo acquisition, after it was disclosed last month, noting that DoorDash's existing market had minimal overlap with Deliveroo's operations.
Deliveroo's largest markets are the U.K. and Ireland. The company also operates in Belgium, France, Italy, Kuwait, Qatar, Singapore and the United Arab Emirates. Meanwhile, DoorDash's international operations including roughly 28 countries where its subsidiary Wolt operates. DoorDash acquired Finland-based Wolt in 2022 for $8 billion.
"We'll cover more than 40 countries with a combined population of more than 1 billion people, enabling us to provide more local businesses with the tools and technology they need to thrive," Xu said in a news release. "The Enlarged Group will bring together DoorDash's strong operating playbook with Deliveroo's local expertise to invest in innovation and execution at an even higher level.
SevenRooms, meanwhile, offers software tools for restaurants that manage marketing, operations and guest experiences, including booking reservations. The company was founded in 2011. DoorDash said in a news release it will integrate those tools into its "Commerce Platform" for restaurants.
Both deals are expected to close later this year, according to the separate DoorDash announcements.
DoorDash Stock On IBD 50
With Tuesday's slide, DoorDash shares have now gained 13% so far this year and are up 61% from 12 months ago.
DoorDash is on the IBD 50 list of top growth stocks. Steady sales growth and improving earnings powered gains for DoorDash stock leading up to the Q1 report.
William Blair analyst Ralph Shackart reiterated an outperform call for DoorDash stock in a client note following the report.
"Given the continued strong growth, scaling margins, and share gains, we believe DoorDash will continue to execute, assuming digital channels continue to take broader market share," Schackart wrote.
Evercore ISI Mark Mahaney also stuck by an outperform call for DoorDash.
"DoorDash is clearly leaning into growth investments (two large acquisitions and small 'affordability initiatives'), but we believe it is doing this from a position of strength and can still deliver robust EBITDA/free-cash-flow growth," Mahaney wrote to clients Tuesday.
