DoorDash's E-Commerce Momentum Grows, But Valuation and Risks Loom Large

What happened

DoorDash's e-commerce growth is accelerating, driven by new verticals like grocery, expanded partnerships, and autonomous delivery trials, which are fueling rising orders and gross order value (GOV). This aligns with the company's strong Q3 2025 financial performance, including revenue of $3.446 billion, GOV of $25.015 billion, and GAAP net income of $244 million, as detailed in recent filings. However, DoorDash faces persistent headwinds from intense competition, regulatory scrutiny over gig-worker classification, and execution risks from integrating acquisitions like Wolt and Deliveroo. The stock trades at a rich valuation of approximately 93x trailing earnings, about 28% above a discounted cash flow estimate of $147 per share, indicating limited margin of safety. While the growth pickup is positive, investors must critically evaluate whether it justifies the premium price amid unresolved uncertainties and the company's history of litigation and high stock-based compensation.

Implication

The acceleration in e-commerce growth reinforces DoorDash's dominant market position and potential for further scale, which could support long-term free cash flow growth if sustained. However, the rich valuation implies that much of this growth is already priced in, leaving little room for error if execution falters or regulatory headwinds intensify. Key monitoring items include the successful integration of Deliveroo and Wolt, achievement of positive unit economics in new verticals, and favorable outcomes in ongoing legal and regulatory challenges. Any adverse regulatory decisions, such as mandates for employee reclassification or fee caps, could materially impact profitability and justify a lower valuation. Therefore, while the growth narrative is intact, the risk-reward profile remains unfavorable for new investments at current levels, aligning with the 'WAIT' stance from the master report.

Thesis delta

The new article on accelerating e-commerce growth does not materially alter the investment thesis, as the master report already incorporates strong growth expectations but emphasizes valuation and risk concerns. The delta is minimal; it underscores the growth potential but reinforces the need for caution given the elevated stock price and unresolved regulatory issues, maintaining the 'WAIT' recommendation.