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DoorDash Stock Drop: DoorDash shares tumbled on Thursday, marking what could be their worst trading session to date, as investors expressed concern over the company’s ambitious spending plans.
The food delivery giant revealed it will invest several hundred million dollars next year to support new initiatives, including autonomous delivery systems and a revamped global technology platform.
While the company framed the investment as a push to strengthen long-term innovation, the scale of spending sparked fears among investors that rising costs could pressure profits in an already competitive market.
DoorDash said its plans to enhance products worldwide are designed to strengthen the business over time, though they will bring notable short-term costs.
The company acknowledged that the new initiatives will involve both direct expenses and lost opportunities in the near term.
Chief Executive Officer Tony Xu defended the strategy during an earnings call, saying DoorDash is staying true to its mission of solving customer challenges with the best possible quality.
He added that the company’s approach to building for the long term remains unchanged, even as it invests heavily in innovation.
“Our past investments in the areas where we operate have proven successful, and we’re applying that same approach again to drive future growth,” DoorDash Chief Executive Officer Tony Xu said.
In recent months, the company has ramped up spending to enter new markets and give customers more choices.
The move comes as DoorDash faces tougher competition from rivals like Uber and growing uncertainty over consumer spending trends.
This year, California-based DoorDash has expanded its business with a series of major moves. The company acquired restaurant booking platform SevenRooms for $1.2 billion and completed a $3.9 billion purchase of U.K. food delivery firm Deliveroo.
In addition, DoorDash introduced “Dot,” an autonomous delivery robot, in September and launched new DashMart fulfillment services designed to help retail partners manage orders more efficiently.
According to Wells Fargo analyst Ken Gawrelski, the scale and ambition of these investments are likely to remain key factors influencing the company’s stock performance in the months ahead.
“DoorDash continues to be led by one of the strongest management teams in the sector, and we expect long-term investors to remain supportive through this phase,” Wells Fargo analyst Ken Gawrelski wrote.
“That said, the company’s uneven transparency means investors may need to exercise some patience.”
For the third quarter, DoorDash reported earnings of 55 cents per share, below the 69 cents projected by LSEG. Revenue climbed 27% from a year earlier to $3.45 billion, topping Wall Street expectations of $3.36 billion.
DoorDash said it expects fourth-quarter adjusted EBITDA to range between $710 million and $810 million, with a midpoint of $760 million. The guidance came in slightly below analysts’ estimates of $806.8 million, according to FactSet.
The company also projected that its acquisition of Deliveroo will add about $45 million to adjusted EBITDA in the fourth quarter and contribute roughly $200 million in 2026.
Even with the recent sell-off, DoorDash shares have gained more than 20% since the start of the year.
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