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Why DoorDash's Stock Is Down 15% Today

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  Published in Stocks and Investing on Thursday, November 6th 2025 at 12:13 GMT by Investopedia
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DoorDash Shares Tumble 15 % Amid Earnings Concerns and Rising Competition

In a sharp sell‑off early Tuesday, DoorDash Inc. (NYSE: DASH) saw its market value slide more than 15 % after the company released quarterly earnings that fell short of Wall Street expectations. The decline echoed a broader sentiment that the food‑delivery market is entering a tougher competitive landscape, as well as mounting pressure on margins and profitability.

Key Numbers Behind the Drop

DoorDash’s second‑quarter revenue totaled $1.44 billion, a 4 % decline from the same period last year, and well below the $1.60 billion consensus estimate of analysts. Operating loss widened to $71 million, compared with the anticipated $80 million loss. The gross margin slipped to 36 % from 38 % in the prior year, while the company reported that its net loss widened to $123 million versus the $101 million expected.

While the company’s top‑line growth is still a 10 % increase year‑over‑year, the slowdown in revenue and margin compression were enough to spark panic among investors who had priced in a much stronger performance. “The upside is still there, but the valuation is quite a bit more aggressive than it should be,” a senior analyst from Wedbush noted in a note attached to the earnings release.

The Competitive Pressures

The article also highlighted that DoorDash is battling intensifying headwinds from competitors like Uber Eats and Grubhub, all of whom are pursuing aggressive marketing campaigns to retain market share. In the fourth quarter of last year, Uber Eats grew its merchant network by 30 %, while Grubhub expanded into more cities, forcing DoorDash to spend heavily on customer acquisition. Analysts point out that the cost of acquiring a new rider is rising, and the average order value is declining due to consumers opting for cheaper delivery options.

One investor who followed the earnings call pointed out that DoorDash’s share of the $200 billion food‑delivery market has shrunk from 45 % to 37 % over the past two years. In the same period, the company’s marketing spend climbed from $150 million to $260 million, a 73 % increase that squeezed operating profitability.

Management’s Response

During the earnings call, DoorDash CEO Tony Xu addressed the concerns by stressing that the company’s “long‑term strategy remains unchanged.” He cited the growth of its “DoorDash for Business” segment, which brings corporate accounts and institutional clients into the platform. “We see an opportunity to increase average order sizes and expand our delivery network into new categories such as grocery and pharmaceuticals,” Xu said.

However, the CEO also announced that the company will be conducting a cost‑reduction exercise that could cut approximately 3 % of its workforce. “We will be tightening operations and focusing on high‑margin segments,” he added. The move was viewed as a reactive measure to curb escalating expenses amid uncertain macroeconomic conditions.

Macro‑Economic Factors

The article linked to a Bloomberg piece discussing how rising interest rates are affecting consumer spending on non‑essential services, including food delivery. With the Federal Reserve tightening the policy, discretionary spending has been slowing down, and consumers are becoming more price‑sensitive. “Food delivery is seen as a premium, non‑essential service that will be cut in times of economic uncertainty,” said a financial commentator from Bloomberg. This macro backdrop has contributed to the market’s negative sentiment toward DoorDash’s growth prospects.

Analyst Sentiment and Valuation

Following the earnings release, many analysts have revisited their target prices for DASH. A research note from Wedbush reduced its price target from $45 to $38, citing the weaker revenue growth and margin pressure. In contrast, some growth-focused analysts maintain a bullish stance, arguing that DoorDash’s scale and brand recognition position it well to weather short‑term turbulence. These mixed views underscore the volatility in the valuation of companies in the rapidly evolving delivery sector.

Bottom Line

DoorDash’s 15 % stock decline reflects a confluence of factors: disappointing quarterly earnings, stiffer competition, higher marketing costs, and an economy that is trending toward tighter consumer spending. While the company’s leadership remains confident about its long‑term strategy, the market has responded to the immediate risk factors by sharply adjusting its valuation. As DoorDash navigates these challenges, investors will be watching closely to see whether the company can rebalance its growth trajectory against the backdrop of a more competitive and cost‑constrained environment.