DoorDash gapped higher by 10% last February after earnings
When we last checked in with DoorDash, Inc. (NYSE:DASH), the food delivery app was in the midst of a post-earnings bull gap. Fast forward two-and-a-half months, DoorDash is gearing up for its latest earnings report.
DoorDash steps into the quarterly confessional after the market close on Thursday, May 5. The stock has seen all four of its post-earnings reactions skew toward upside, including a 10.7% gap higher back in February. This time around, the options market is pricing in a larger-than-usual post-earnings move of 25.4%.
DoorDash stock is off by 45% year-to-date, and hit an annual bottom of $74.32 on March 14. While the shares bounced off this low, their 100-day moving average rejected the rally back in early April. Last seen at $82.78, DASH is a far cry from its Nov. 15 record high of $257.25.
The equity remains overvalued at a price-sales ratio of 6.13, due to an expected slowdown in the company’s revenue growth rate. DASH previously reported 69% revenue growth for fiscal 2021 and had managed to increase their top line by an outstanding 1580% since fiscal 2018. Now estimates have DoorDash growing revenues by 20.8% for fiscal 2022 and by 24.5% for fiscal 2023.
Although the figures represent a solid growth rate, they also indicate a downturn for the business’ best attribute. This is further amplified by DASH’s lack of profits, which could potentially lead DoorDash stock to new lows in market where profitability and valuation are key. However, DASH's long-term outlook is much better. With a balance sheet that holds $3.76 billion in cash and $399 million in total debt, the food delivery company could be well equipped to weather the storm.