DoorDash Earnings: Network Effect Is Driving Strong Top-Line Growth and a Path Toward Profitability

Product improvements such as more restaurant and non-restaurant options and increased on-time deliveries have helped strengthen DoorDash’s network effect, which shows up as growth in the number of orders and the average order size. The firm also stated that monthly active users increased by a double-digit rate from last year, which helped attract more high-margin ad dollars. Declining consumer and courier acquisition costs also show an improving network effect, all of which helped expand the adjusted EBITDA margin for the fourth consecutive quarter. We have raised our projections but are maintaining our $155 fair value estimate. We continue to view the stock as attractive. DoorDash’s third-quarter results also likely indicate a strong third quarter for Uber’s delivery segment.