DoorDash’s (NYSE:DASH) huge, rapidly growing market share, improving financial results, and promising initiatives leave DASH stock well-positioned to outperform the Nasdaq and the S&P 500 over the medium- and long-term. Consequently, I urge growth investors to buy DoorDash’s shares after they fell 1over 20% since April 4.
DoorDash’s U.S. market share has boomed from just 16% in 2018 to a whopping 53% in 2021. That strong, rapid growth is encouraging, not only because it has helped improve the company’s financial results, but also because it indicates that American consumers have been, in general, very pleased with the company’s delivery service and its selection of restaurants and stores.
As I pointed out in a previous column, “in 2021, DoorDash’s cash flow from operating activities came in at a hefty $692 million, up from $252 million in 2020.” And in the fourth quarter (Q4) of 2021, despite easing fears about the coronavirus, the company’s revenue jumped to $1.3 billion, up from $970 million.
Also in Q4, DoorDash’s gross profit surged to $637 million from $477 million during the same period a year earlier. Additionally, its gross margin was unchanged at 49%. Finally, its net loss improved to $155 million in Q4 from $312 million during the year-ago period. Clearly, DoorDash is growing rapidly while its profitability is quickly improving.
Multiple Initiatives With High Potential
On March 28, BJ’s Wholesale Club (NYSE:BJ), a leading wholesale club, announced that it would launch an alliance with DoorDash. As a result of the agreement, BJ’s will become the first wholesale club to make its products available on DoorDash. Given the vast varieties and amount of goods available at large wholesale clubs, the deal will make DoorDash very attractive to many consumers.
DoorDash’s agreement with BJ’s came after the delivery company, in February, made a similar deal with Albertsons Companies (NYSE:ACI), a large grocery chain. Because of the latter deal, DoorDash says that it will be able to provide “convenient delivery of fresh groceries in under 30 minutes,” another InvestorPlace columnist, Chris Lau, reported.
If DoorDash is able to sign deals with several more huge retail chains like BJ’s and Albertson’s and deliver their products in less than an hour, the delivery company will start taking significant market share from Instacart and even Amazon (NASDAQ:AMZN). After all, the latter tech giant has not yet been able to offer deliveries in less than an hour.
DoorDash’s multiple strengths combined with its gigantic potential make DASH stock very attractive for long-term, growth investors.
On the date of publication, Larry Ramer 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.
