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Why DoorDash's Stock Dropped 17% Today

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  Published in Stocks and Investing on Thursday, November 6th 2025 at 17:32 GMT by Investopedia
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1. The earnings shock

DoorDash’s Q2 2024 results showed revenue of $1.34 billion, missing the consensus estimate of $1.38 billion. While the company still posted a 4.2 % increase in gross transactions year over year, analysts flagged the slower growth as a sign that the pandemic‑era surge in delivery volumes is finally ebbing. Net income was a modest $38 million, versus the consensus expectation of a $52 million loss, but the real pain came in earnings per share: 23 cents, below the $31 cents anticipated by Wall Street.

Chief financial officer Paul Buehler explained that the miss was largely due to higher marketing and promotion spend, as DoorDash seeks to retain market share against growing rivals such as Uber Eats and Grubhub. Buehler also noted that the company’s cost structure, particularly driver payments and freight, remains a drag on profitability as the business expands into new regions.

2. Guidance cut and analyst downgrades

In addition to the earnings shortfall, DoorDash trimmed its full‑year revenue forecast to a range of $5.3 billion to $5.5 billion, below the previously projected $5.6 billion to $5.8 billion. The company also revised its earnings per share outlook downward, citing tighter margins and rising operating expenses.

The revised guidance triggered a wave of downgrades from major analysts. Bloomberg reported that at least six firms lowered their price targets, with a median target of $84.00, down from $93.00 earlier in the quarter. The downgrade wave was compounded by a broader shift in the market, where many investors are re‑evaluating the “super‑app” model of delivery platforms amid rising labor costs and regulatory scrutiny.

3. Competition and market saturation

The article linked to an Investopedia piece on “Delivery Industry Competition” which highlights how Uber Eats, Grubhub, and emerging regional players are vying for a shrinking pool of consumers. Each platform is investing heavily in exclusive restaurant partnerships and lower‑cost delivery incentives. DoorDash’s strategy of expanding into new markets and adding services such as “DoorDash for Business” and “DashMart” is still being tested, and the current results suggest that the cost of scaling is eating into profits.

A CNBC report cited in the article notes that DoorDash’s top competitor, Uber Eats, has announced a partnership with major grocery chains to broaden its delivery options. Meanwhile, Grubhub has been aggressively acquiring smaller local delivery firms, a move that could intensify price wars and erode margins for all players.

4. Macro‑economic backdrop

The article references a Reuters piece that discusses the impact of the Fed’s tightening cycle on discretionary spending. Higher interest rates have dampened consumer appetite for dining out and, by extension, delivery services. Additionally, inflationary pressures on food and fuel costs have led DoorDash to raise delivery fees in an attempt to maintain margins, a move that has not yet been fully absorbed by the customer base.

Investors are also wary of the broader “tech” rally that has seen many growth stocks trade at high price‑to‑earnings ratios. In this environment, any earnings miss or guidance cut can trigger significant sell‑off pressure, as was the case for DoorDash today.

5. Management’s response and future outlook

CEO Tony Xu reassured shareholders during the earnings call that DoorDash remains committed to “building a strong ecosystem that benefits restaurants, drivers, and customers alike.” He highlighted the company’s focus on technology, such as AI‑driven route optimization, to reduce delivery times and costs. Xu also emphasized that DoorDash’s “flexible workforce” model is designed to adapt to changing market conditions, although he admitted that balancing supply and demand remains a challenge.

Looking ahead, DoorDash plans to launch new initiatives, including a subscription model for frequent customers and a pilot for autonomous delivery units in select cities. These initiatives, the company said, should help drive incremental revenue and offset the higher operating costs in the near term. However, the timeline for achieving profitability on these new ventures remains uncertain.

6. Bottom line for investors

The 17 % slide in DoorDash’s stock is a stark reminder of how quickly market sentiment can shift when a high‑growth tech company falls short of expectations. While the company still boasts a sizable user base and a strong position in the North American market, the current earnings miss and lowered guidance suggest that investors will be watching closely for any signs of acceleration or deceleration in growth.

In the short term, the stock has been pulled back into a defensive trading range, trading between $72 and $78 per share. Over the longer term, the company’s trajectory will hinge on its ability to convert its technology investments into sustainable profitability, navigate intensifying competition, and weather macro‑economic headwinds that affect discretionary spending. For now, DoorDash remains a high‑risk, high‑reward play, and its future will depend on whether it can translate its strategic initiatives into the earnings growth that investors have come to expect.