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Can DoorDash Stock Outpace its Rivals? By TipRanks

© Reuters. DoorDash Stock Can Outpace Its Rivals

DoorDash stock (DASH), held up relatively well in Monday’s intense session of trading that saw many high-profitable tech stocks fall.

It fell 1.2% over the course of the day and appears to be in a great position to continue its momentum, even with the wider market correction many strategists and investors expect in the next weeks.

DoorDash stock is poised to continue soaring to new heights due to its momentum, and the presence of a few catalysts. However, this could happen even as more high-growth stocks fall under the hammer of the selloff.

The current price is still a bit high. Stock currently trades at 17.6 times its sales. This is quite high for a company that operates in the highly competitive world of food delivery.

Although I love the potential gains and momentum of DASH stock, in the case of worsening pandemic regulations, I prefer to keep the name neutral. (See DASH stock charts on TipRanks)

DoorDash’s Top Spot Could Be Challenged

As the top food delivery play in America, DoorDash has the ability to scale up as it explores options for pickups, most notably convenience store pickups and, most recently, liquor delivery.

Uber (NYSE:) is a rival. The company has room for growth. DoorDash holds 57% of U.S. restaurant delivery market. This gives it the potential to reap significant networking benefits. DoorDash can easily increase its market share and surpass its competition if it uses its network effectively.

Uber Eats is a threat to the market that should not be overlooked. Uber Eats is aggressively investing money in marketing. Uber Eats is likely to put tremendous pressure on the incumbent market leader, given its low switching costs.

DoorDash could be considered the company in food delivery that has the biggest stake, particularly as Uber seeks to offer its customers a greater value proposition by bundling its services.

Uber Eats would likely attract frequent riders who use the service for food delivery.

DoorDash’s future success may hinge on exclusive restaurants, grocery stores, and other retailers. It has a capable management team that I believe will be able to fight off Uber.

Wall Street’s Take

According to TipRanks’ analyst rating consensus, DASH stock comes in as a Moderate Buy. There are 14 analysts ratings. Ten Buy recommendations and four Hold recommendations.

The average DASH price target is $209.27. The price targets of analysts range from $180 to $255 per shares.

Bottom Line

On the whole, analysts aren’t too enthused with DoorDash stock after its latest run. An analyst’s average price target predicts a negative return for the stock over the next twelve months. However, the name has no Sell rating.

DASH stock may be susceptible to a pullback if the worst pandemic restrictions are over. This is due to its high valuation.

However, outbreaks triggered by variants could be the tide that lifts all boats on the food delivery market. DASH stock could be one of the best lockdown hedges available in this space.

Disclosure: Joey Frenette did not hold shares in the mentioned companies at publication.

Disclaimer: This article is solely the author’s opinion and does not reflect the opinions of TipRanks and its affiliates. It should only be used for informational purposes. TipRanks cannot guarantee the reliability, completeness or accuracy of any information. The article does not constitute a solicitation or recommendation to buy or sell securities. The article does not provide legal, financial, investment, or professional advice. It also doesn’t take into consideration the individual needs or requirements. Neither is the information contained in it a complete or comprehensive statement about the subject or issues discussed. TipRanks, its affiliates, disclaim any liability or responsibility in relation to the articles. You are responsible for your actions based upon the articles. TipRanks and its affiliates do not endorse or recommend this link. Performance in the past is no guarantee of future performance, price or results.

Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.