Though DoorDash’s execution & management are widely considered the class of the sector, as 2023 dawns, the analyst is uncomfortable with a potentially unfavorable risk/reward given likely hypersensitivity to order deceleration.
Erickson thinks the combination of evident slowing core order growth, limited EBITDA downside support, and Uber Technologies, Inc. (NYSE: UBER) competing better in Manhattan as a proxy has prompted him to downgrade the stock.
The analyst’s latest Manhattan restaurant checks using his proprietary indexed ranking system found noteworthy p/p improvement by Uber in terms of relative order volumes versus Just Eat Takeaway.Com N.V. (OTC: JTKWY) subsidiary Grubhub & DoorDash.
He thinks Uber’s loyalty plan & strong suburb awareness may be at least partial contributors and indicates Uber is on the brink of taking over the number one share from Grubhub in Manhattan.
Erickson thinks he could be wrong if the core U.S. restaurant marketplace reaccelerates back to mid to high-teens and if management cuts significant portions of loss-making efforts further driving more material upside to EBITDA estimates.
Price Action: DASH shares are trading lower by 2.56% at $55.66 on the last check Friday.
