Stockchase Opinions

Jim Cramer - Mad Money Doordash DASH-N BUY Dec 07, 2020

They IPO Wednesday and will be the biggest debut this year after Snowflake. They have 390,000 merchants and 18 million customers. They've processed 900 million orders. Food delivery become essential during Covid. Meanwhile, Doordash has bought competitors and the space has actively consolidated. Covid has accelerated it development because of the lockdowns. DD is the biggest player in food delivery, taking 50% market share. There's a lot of room to grow. They are expanding into groceries and flowers. DD is unprofitable given huge marketing costs, but these costs are worth attracting more customers. Revenues grew 204% YOY, total orders by 217% and gross order volume 186%. It's far from profitable, but margins are widening. DASH will be priced at $90-95 at IPO, less than 7x 2021 sales estimates, but he thinks $100 is reasonable, but no more--business will slow a lot next year when society reopens. He predicts a pullback in 2021.

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BUY
Like Airbnb, it's taken permanent market share because of the pandemic. People now like to order food delivered home through the app.
BUY
A Covid winner and now a post-Covid buy The street expecting customers to abandon these food-delivery apps once the pandemic lifted. Consumers hung up because of the convenience.
DON'T BUY
Wall Street has left certain "pandemic" stocks for dead. It fell from $250 to below $75 then bounced to $127. He has high hopes for the company long term, but it is losing money. So, he can't recommend his stock. The stock is still pricey and it's losing money. Many restaurants will still use Doordash, though.
COMMENT
They report Thursday. They endured the pandemic with flying colours. But the standards are set so high for quarterly reports these days that if they don't beat handily, shares will fall.
BUY
It had a strong run in 2021, but has lost 78% of its value from the peak. DASH last week reported a super quarter; gross order value was up 25% YOY. People are continuing to order food delivered to their homes and this won't go away. Wall Street worries that DASH could get hit in a recession.
BUY

They report Thursday. He expects them to report a profit.

BUY

It just reported a clean revenue beat and raised guidance for this quarter and the full year. 

BUY

They just delivered good numbers. Likes it.

BUY

Last week, they reported a beat on every line item, including 23% revenue growth YOY and total orders 91% YOY, with improved guidance. From the pandemic, people are used to using food delivery apps, given order frequency and customer retention, while digital penetration is growing including their monthly subscription.

RISKY

He recently bought. It's risky. But they offer a convenience that will never go away. They have 67% market share and were profitable for the first time last quarter. The forward PE remains high, but they have 25-30% revenue growth. Have great cash flow and margins.