Key insights
- Wolfe Research lowered its DoorDash price target from $265 to $195, citing the impact of fuel price relief efforts for delivery drivers. This initiative is expected to cost the company $15 million if it ends in four weeks, with most of the impact in Q2. While the program may improve dasher retention and basket sizes, it leads to a downward revision of EBITDA estimates. The analyst maintains an Outperform rating, but the news is slightly negative for the stock in the short term.
Investing.com - Wolfe Research lowered its price target on DoorDash Inc. (NASDAQ:DASH) to $195 from $265 while maintaining an Outperform rating on the shares. The stock currently trades at $148.69, just 4% above its 52-week low of $143.30, according to InvestingPro data. Despite the recent 46% decline over six months, InvestingPro’s Fair Value analysis suggests the stock remains undervalued at current levels.
The firm reduced its gross order value and EBITDA estimates to account for the impact of DoorDash’s fuel price relief effort for delivery drivers. The analyst also factored in modest headwinds to revenue against tougher comparisons in the second quarter.
Wolfe Research estimates the gas relief program will cost $15 million if it ends in four weeks, with the majority of the impact hitting in the second quarter at $11 million. This results in a 0.5% downward revision to the firm’s fiscal 2026 EBITDA estimate. If DoorDash continues the relief effort, the firm estimates an incremental cost of $15 million monthly.
DoorDash’s gas price relief effort includes giving 10% cash back on gas for dashers with a DoorDash Crimson Visa debit card at any U.S. gas station, five times the standard 2% rate. Eligible dashers who drive 125 miles or more while active on deliveries will receive a weekly fuel relief payment starting at $5 and going up to a maximum of $15 based on miles driven.
Wolfe Research said the gas relief program is the right initiative in the current environment because dasher retention will likely improve, leading to lower dasher acquisition costs, while inflation leads to higher basket sizes, commissions, and service fees. For deeper insights into DoorDash’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available for this and 1,400+ other US equities on InvestingPro.
In other recent news, DoorDash has reported fourth-quarter results that slightly exceeded expectations. The company’s gross order value surpassed estimates by approximately 1%, and its adjusted EBITDA also beat projections by about 1%, according to DA Davidson. Despite these positive results, DA Davidson lowered its price target for DoorDash to $224 from $260, citing valuation concerns while maintaining a Neutral rating on the stock.
DoorDash is also expanding its retail partnerships, having announced a collaboration with Foot Locker. This partnership adds nearly 1,300 Foot Locker, Kids Foot Locker, and Champs Sports locations to DoorDash’s marketplace, allowing consumers to order athletic goods for on-demand delivery. Additionally, DoorDash is leveraging AI to improve delivery logistics and customer service, as noted by Citizens, which reiterated a Market Outperform rating with a $250 price target.
BofA Securities reiterated a Buy rating on DoorDash, highlighting the company’s gas price relief program for delivery drivers as an effective strategy for maintaining driver relationships. Bernstein SocGen Group also maintained an Outperform rating, following discussions with DoorDash management about the company’s long-term reinvestment strategy and global operational approach. These developments reflect ongoing efforts by DoorDash to enhance its service offerings and maintain competitive positioning in the market.
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