DoorDash Inc. posted record orders, but fell as investors focused on signs the food-delivery company will need to spend heavily to expand into new markets and sustain its pandemic-induced hyper growth.
Sales increased 83% to $1.24 billion in the three months ended June 30, the San Francisco-based company said Thursday in a statement. Analysts, on average, projected $1.09 billion, according to data compiled by Bloomberg.
DoorDash reported a loss of $102 million from a profit of $23 million in the second quarter a year earlier. Analysts, on average, projected a loss of $66.7 million. Expenses more than doubled to $1.34 billion as the company increased investments to build out non-meal categories, expand internationally and boost driver recruitment. DoorDash said the spending will continue.
“We intend to increase our level of investment in these categories in the second half of 2021, with a particular near-term focus on expanding selection and improving the quality and consistency of our delivery experience,” the company said in a letter to investors. While DoorDash gave a rosy sales outlook for the current period, the company cautioned it expects a seasonal decline in new customers and order rates, adding that consumer behavior remains uncertain.
Food delivery’s triple-digit growth rate isn’t going to last over the long term, said Joe McCormack, a senior analyst at Third Bridge Group. For DoorDash, “to prop up growth a lot of focus is going to be placed on new frontiers like grocery, convenience and international markets.”
Shares declined as much as 7.5% in extended trading after closing at $188.21 in New York. The stock has gained 85% since the company’s December initial public offering.