Investing in stocks comes with the risk that the share price will fall. And unfortunately for DoorDash, Inc. (NYSE:DASH) shareholders, the stock is a lot lower today than it was a year ago. In that relatively short period, the share price has plunged 66%. DoorDash hasn’t been listed for long, so although we’re wary of recent listings that perform poorly, it may still prove itself with time. On top of that, the share price is down 12% in the last week.
After losing 12% this past week, it’s worth investigating the company’s fundamentals to see what we can infer from past performance.
Because DoorDash made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
DoorDash grew its revenue by 33% over the last year. That’s definitely a respectable growth rate. Unfortunately it seems investors wanted more, because the share price is down 66% in that time. It is of course possible that the business will still deliver strong growth, it will just take longer than expected to do it. To our minds it isn’t enough to just look at revenue, anyway. Always consider when profits will flow.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. You can see what analysts are predicting for DoorDash in this interactive graph of future profit estimates.
A Different Perspective
We doubt DoorDash shareholders are happy with the loss of 66% over twelve months. That falls short of the market, which lost 21%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. With the stock down 4.9% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. I find it very interesting to look at share price over the long term as a proxy for business performance.