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DoorDash Stocks Rise Despite Driver Shortage Curtailing Growth

DoorDash Stocks Rise Despite Driver Shortage Curtailing Growth

DoorDash Stocks Rise Despite Driver Shortage Curtailing Growth

On-demand delivery platform DoorDash reported a wider than expected quarterly loss with a shortage of delivery drivers handicapping its growth and consumer demand outstripping its forecast.

“Stronger-than-expected consumer demand, along with extreme weather events and the impact of stimulus checks, resulted in a meaningful undersupply of Dashers in the latter part of Q1,” the company’s executives wrote in a letter to investors.

“Stimulus checks created a particularly acute challenge, as we believe they drove a short-term increase in consumer demand and a simultaneous decrease in Dasher hours,” they added.

The company’s net sales increased by 198 percent to $1.08 billion, exceeding expectations of $993.3 million, with total order volume reaching 329 million. The company, however, struggled with various controls imposed by different municipalities on how much commission the company can charge on orders placed with restaurants. This erased $31 million in potential revenue for DoorDash.

Overall, the company reported a net loss of $110 million in fiscal Q1, which equated to 34 cents per share. This still marked an improvement from the year prior, when the company reported a loss of $110 million and a loss of $2.92 per share.

Despite the losses, the company’s investors remain bullish on its growth prospects. The company’s stock increased by more than 6 percent in extended trading hours yesterday after hitting an all-time low earlier in the day.

The delivery platform has been making efforts to expand its services across different verticals such as pet care, convenience stores products, groceries and flower delivery. Orders for such products grew by 40 percent compared to the previous quarter, CNBC reported. The company noted that customers placing an order for products other than restaurant orders return to its platform more frequently.

Still, there are several key challenges that lie ahead for the company. With states relaxing their social distancing protocols and the weather warming up, more consumers are choosing to dine in restaurants. This will likely impact the total order volume for DoorDash, especially among consumers that do not subscribe to its DashPass subscription service.

“Nonetheless, we are encouraged by the consumer behavior we have observed thus far and are more optimistic with regard to our full-year prospects than we were at the beginning of the year,” the company said.

Looking ahead, the company expects its gross order value to range between $35 billion and $38 billion, up from its previous range of $30 billion to $33 billion.

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