DoorDash – (DASH) $137 Buy: Restaurant delivery leader with 65% market share. Long-term investment.
Trade Alert: Bought DoorDash at $137.
Positives
DoorDash has a large moat with 65% of the US restaurant delivery market, that’s a huge reach. Uber Eats is second with 22%.
- Two strong barriers to entry – Its virtuous network brings users and restaurant owners together, the restaurants need the app with the largest number of users, the users need the app with the largest choice of cuisine – that creates a barrier to entry. It took DoorDash $40Bn to build the platform – a new entrant will find it difficult to scale without going broke.
- DASH is expanding margins and generating a lot of cash.
- It is a bargain with forecasted 45% adjusted earnings growth for the next three years.
- Negatives
- I don’t see huge gains in grocery delivery, Instacart owns about 75% of the market.
- Customers and restaurants are always for cheaper pricing, Dash has a lot of complaints about price gouging from both ends.
- DoorDash is already up over 100% in the past year so we could see sluggish growth in 2024, I’m likely to buy more around $120.
- Here’s the link to the article.
https://seekingalpha.com/article/4681897-doordash-dominates-deliveries