The Canadian Competition Bureau has initiated legal proceedings against DoorDash (DASH, Financial) Inc. and its subsidiary, DoorDash Technologies Canada Inc., due to deceptive pricing strategies related to their delivery services. During a thorough investigation, the Bureau discovered that prices shown on DoorDash's websites and apps do not reflect the actual costs incurred by customers. This discrepancy is primarily due to the addition of obligatory fees at checkout, a tactic known as drip pricing, which prevents consumers from seeing the true cost upfront.
Customers are subjected to various compulsory charges, including service fees, delivery charges, and additional fees for smaller orders and regulatory responses. These result in customers paying more than advertised or receiving lesser discounts. The Bureau claims that DoorDash has been using these practices for almost ten years, collecting nearly $1 billion from these fees. Moreover, the representation of certain fees on DoorDash’s platform may lead customers to mistakenly believe they are taxes, while they are actually charges set by DoorDash.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 36 analysts, the average target price for DoorDash Inc (DASH, Financial) is $218.76 with a high estimate of $240.00 and a low estimate of $179.34. The average target implies an downside of 0.15% from the current price of $219.10. More detailed estimate data can be found on the DoorDash Inc (DASH) Forecast page.
Based on the consensus recommendation from 42 brokerage firms, DoorDash Inc's (DASH, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for DoorDash Inc (DASH, Financial) in one year is $151.48, suggesting a downside of 30.86% from the current price of $219.095. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the DoorDash Inc (DASH) Summary page.
DASH Key Business Developments
Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- DoorDash Inc (DASH, Financial) is expanding its international presence with the acquisition of Deliveroo, which is expected to add scale and enhance its European operations.
- The company has seen strong growth in its new verticals, particularly in grocery, with an increasing number of users ordering both groceries and restaurant meals.
- DoorDash Inc (DASH) continues to focus on improving unit economics and driving retention and order frequency, which is expected to enhance profitability.
- The DashPass membership program is experiencing growth, with an all-time high in subscribers and increased order frequency.
- DoorDash Inc (DASH) is investing in autonomy and technology to improve delivery efficiency and customer satisfaction, which could lead to long-term operational benefits.
Negative Points
- The acquisition of Deliveroo and SevenRooms may require significant investment, potentially impacting short-term profitability.
- Deliveroo's growth and margins have been lower than DoorDash Inc (DASH)'s, raising concerns about structural challenges in the European market.
- The company's take rate has decreased due to increased promotional activities and affordability initiatives, impacting net revenue margins.
- There is ongoing regulatory uncertainty, particularly in cities like New York, which could affect operational costs and pricing strategies.
- The competitive landscape in Europe remains intense, with DoorDash Inc (DASH) entering some markets as a second or third player, which may require additional resources to gain market share.
