- DoorDash (DASH) is boldly investing in a hospitality-technology start-up.
- This should, in the long run, help the company to expand its business model and revenue.
- Investors should take advantage of this opportunity to own DASH stock before it revisits $200.
Food delivery company DoorDash (NYSE:DASH) became a buzz-worthy business on Wall Street during the onset of the Covid-19 pandemic. DASH stock is a strong buy today and even has the potential to double in price.
Two years after Covid-19 reached the United States, some skeptics might wonder whether DoorDash can adapt to changing circumstances. After all, more people feel comfortable going out to eat at restaurants nowadays. Thus, home delivery of food might not be seen as a red-hot market like it once was.
Perhaps this concern is what brought the DoorDash share price down from its 2021 peak. Yet, as we’ll see, the company is still demonstrating robust revenue growth — and besides, a tech-focused acquisition should help DoorDash bring a new class of clients into the fold.
| DASH | DoorDash | $122.32 |
What’s Happening with DASH Stock?
DASH stock may have been a darling of the markets in 2021, when it traded at $200 or even more than that. Lately, though, the stock has struggled just to stay above $100.
Could the share price double from here and clear the $200 bar once and for all? There are certainly reasons to think so.
For one thing, DoorDash recently cemented its reputation as a leading food-delivery platform by partnering with grocery giant Albertsons Companies (NYSE:ACI).
Through this collaboration, DoorDash will provide what it describes as “express grocery delivery, a new service that offers consumers faster and more convenient delivery of fresh groceries in under 30 minutes.”
This will be available to consumers in more than 20 major U.S. cities, including Los Angeles, Denver and Seattle. From produce and dairy to snacks and even frozen foods, DoorDash’s customers will have access to more than 6,000 items for grocery delivery.
The Albertsons partnership should help bolster DoorDash’s revenue — which is already growing quickly, by the way. Indeed, unaudited results indicate DoorDash increased its revenue from $970 million in 2020’s fourth quarter to $1.3 billion in 2021’s fourth quarter, and from $2.9 billion in full-year 2020 to $4.9 billion in full-year 2021.
DoorDash Is Urgently Seeking Merchants
Many people probably view DoorDash as a company that caters to individuals and families. The partnership with Albertsons might reinforce this view, to a certain extent.
Yet, there’s actually more to the company’s business model than delivering food to people’s homes. To this point, DoorDash has agreed to acquire a hospitality-technology startup called Bbot.
Rather than focusing on the customers themselves, this collaboration will “support the evolving needs of restaurateurs and other food and beverage venue operators.”
In other words, DoorDash is targeting merchants with this acquisition. Notably, on the Bbot website, it now says, “Bbot powered by DoorDash.”
It also touts itself as a “powerful digital ordering for your restaurant,” as the Bbot app deploys a simple, intuitive platform to facilitate in-store digital orders and payments, among other tasks.
Furthermore, Bbot promises an array of benefits (according to DoorDash), as it “allows merchants to increase sales while creating higher quality experiences for customers and staff,” while also providing them “the ability to utilize all their tables and extend their hours even when faced with staff shortages.”
Bbot’s platform is a perfect fit for DoorDash, and it’s actually surprising that this type of transaction didn’t happen sooner. In time, this acquisition could give a major boost to DoorDash’s top and bottom lines.
What You Can Do Now With DASH Stock
The Albertsons partnership reinforces the idea that DoorDash is still a powerful contender in the in-home food-delivery market. At the same time, the Bbot buyout indicates DoorDash’s target market extends beyond individual consumers.
In addition, its revenue growth is quite impressive. In light of these considerations, DASH stock has the potential to return to $200 and is therefore worth holding now.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
