DoorDash (NYSE:DASH), a food delivery and logistics platform serving customers in the United States, Canada and Australia, will announce its first-quarter 2022 results on May 5 after market close. This earnings report can set a new trend for DASH stock, depending on whether it sees positive or negative surprises.
Recently, I argued DoorDash won’t easily reach $161. I would give it very slim chances now, as this would represent almost 100% upside from its closing price of $82.22 on April 27. Overall, my bearish thesis on DASH stock remains.
What are the key metrics to pay attention to its earnings report approaches? It is notable that DoorDash has a history of missing estimates or delivering negative earnings per share (EPS) surprises over the past five consecutive quarters.
Strange things happen on Wall Street during earnings season. A company may report mixed results, but a key metric like EPS may be enough to fuel a rally, even if it is a short one. Shares of DoorDash have lost nearly 42% year-to-date, so an EPS surprise could be what the stock needs to bounce higher. The 52-week high of $257.25 is now an unrealistic level for it to reach anytime soon.
Other than EPS, key metrics to monitor and analyze include total orders, monthly active users (MAUs), marketplace gross order value and revenue. Slowing revenue growth has been raising a lot of concerns about the business expansion of DoorDash.
On another note, it will be interesting to see how its acquisition of European food delivery platform Wolt has contributed to profitability and revenue growth. Will DoorDash report a narrower net loss? This would be good news, as the company is unprofitable as of 2018.
Turning to free cash flow, DoorDash has done well in the past two years and the past four consecutive quarters. Free cash flow is one of the very few key metrics in which DASH stock has performed well.
In this context, any negative surprise or slowdown in positive free cash flow would be bad news. DASH stock has announced it will be very conservative in its hiring goals this year, which will be good for reducing operating expenses, but probably bad for its sales growth.
On the date of publication, Stavros Georgiadis, CFA 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.