I did buy some DoorDash (NASDAQ: DASH) from the $140-150 level, but feel that potentials are priced in now.
To put some rough numbers –
DoorDash in 2020 Q3:
- Active customers: 18 million
- Total number of orders: 236 million
- That’s around 1 order per week for each customer.
- GOV: 7,252 billion
- So $ per order = $30.7
- Revenue: 879 billion
- Take rate = 12.1%
- Contribution Margin = 24.5%
- Adj. EBITDA Margin = 9.8%
That’s a nice profit thanks to growing orders during covid (no marketing needed).
The question is how much of the growth will continue post-pandemic.
My guess is that GOV will continue to grow, due to
- Food delivery offers greater convenience & more selections – benefits that are not only tied to the pandemic (DashPass can become a food explorer’s subscription)
- DoorDash is inner-city-delivery-as-a-service and can expand to groceries & pickups from brick-and-mortar stores. It’s a way to revive every kind of physical retail.
Plus, it’s legit to argue that as delivery network density grows, the efficiency grows, and unit cost will drop.
That being said, let’s assume (post-pandemic, by 2022) total order number goes to 450 million/qtr so 1,800 million/yr (e.g. 30 million customer x 60 orders/yr)
$ per order goes up to $35.
GOV = $63 billion
With unchanged 12% take-rate, revenue = $7,560 billion
Adj. EBITDA = $1,512 billion (margin improved to 20%)
Then 40x adj. ebitda will give us a valuation of ~$60 billion. (which is DoorDash’s current valuation)
Clearly, multiples will depend on the market sentiment.
Some of the assumptions are not conservative I have to say, so I won’t expect some solid 50% return ($90bn valuation) from the current level in near term.