DoorDash shares dive as new investment plan unnerves investors

Audio By Carbonatix

Enlarge

By Joel Jose

(Reuters) -DoorDash’s stock tumbled 14.2% on Thursday as investors recoiled at the company’s plans to invest hundreds of millions more in its 2026 growth strategy amid mounting cost concerns.

The San Francisco-based company also missed Wall Street estimates for third-quarter profit due to rising expenses.

DoorDash has ramped up investments in partnerships – including with Domino’s Pizza, retailer Kroger and robotics firm Serve Robotics – as it broadens its last-mile delivery offerings to reach a wider customer base.

The market’s reaction reflects broader concerns about consumer spending and macro uncertainty, said Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors.

The selloff was more of a “kitchen reshuffle than a kitchen fire” as investors balk at the near-term cost of long-term bets on bots, tech integration and brand partnerships, he said.

The company, whose shares have gained about 42% so far this year, said total costs and expenses for the third quarter rose about 23% to $3.19 billion from a year ago.

These partnerships, however, helped the company beat quarterly revenue estimates and forecast fourth-quarter gross merchandise value above Wall Street expectations.

However, some analysts said the additional investments should not come as a “surprise”, given the company’s history of aggressive investing and delivering returns.

“We don’t view these investments to come as a change in investment philosophy as DoorDash is taking the profit pool in its core US restaurant business and Deliveroo and re-investing in growth,” Morgan Stanley said in a note.

DoorDash acquired British rival Deliveroo in a $3.9 billion deal earlier this year.

(Reporting by Joel Jose in Bengaluru; Editing by Leroy Leo and Pooja Desai)