Over the last six months, DoorDash’s shares have sunk to $229.28, producing a disappointing 7.1% loss - a stark contrast to the S&P 500’s 10.8% gain. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Following the drawdown, is this a buying opportunity for DASH? Find out in our full research report, it’s free for active Edge members.
Why Is DoorDash a Good Business?
Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NYSE: DASH) operates an on-demand food delivery platform.
1. Orders Skyrocket, Fueling Growth Opportunities
As a gig economy marketplace, DoorDash generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.
Over the last two years, DoorDash’s orders, a key performance metric for the company, increased by 20% annually to 776 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction. 
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
DoorDash’s full-year EPS flipped from negative to positive over the last three years. This is a good sign and shows it’s at an inflection point.
3. Increasing Free Cash Flow Margin Juices Financials
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, DoorDash’s margin expanded by 12.6 percentage points over the last few years. This is encouraging because it gives the company more optionality. DoorDash’s free cash flow margin for the trailing 12 months was 15.8%.
Final Judgment
These are just a few reasons why DoorDash ranks near the top of our list. After the recent drawdown, the stock trades at 28.8× forward EV/EBITDA (or $229.28 per share). Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
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