In this episode, Scott Becker unpacks DoorDash’s 8-9% stock drop and raises red flags over its shift from organic growth to multi-billion-dollar acquisitions.
Chapter 1: What is the main topic of this episode?
This is Scott Becker with the Becker Private Equity and Business Podcast. We've just passed 7 million downloads, so God bless everybody that listens. Been ranked number one this week in the Apple Business and News category, so that's fantastic too. Today's discussion is DoorDash enters death spiral. So here's the issue.
Chapter 2: What caused DoorDash's stock drop?
Chapter 3: What are the implications of DoorDash's growth slowdown?
That headline might be a bit of an overstatement, but here's what we're talking about. The stock is down about 8%, 9% today. It's still up about 12% year to date, or at least it shows that on the books today. But here's what's happening. DoorDash is in that horrendous situation that we find companies in sometimes where the organic growth has slowed to almost zero.
And then it has to find revenue through big ticket acquisitions. So we recently just announced two big acquisitions. It's buying United Kingdom company Deliveroo, which is another delivery service for about $3.9 billion. It's also buying a company called Seven Stores. I don't know anything about it, but another delivery type service. But the real issue here is the death spiral.
What I absolutely hate in watching companies is when the organic growth is totally stalled and they make it up through acquisitions. It's almost an old adage of losing money and everything, but making it up through volume. That always gives me great concern as an investor, as a watcher, and so forth.
I'd rather hold on to the price tag of Palantir, which is dropping today itself, which is still showing tremendous growth and not able to make it up on volume or through acquisitions. So again, the door-death spiral. Thank you for listening to the Becker Private Equity and Business Podcast.