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DoorDash Inc. could be a lasting beneficiary of trends that emerged during the pandemic even as in-person activity rebounds.
That’s the view of Evercore ISI analyst Mark Mahaney, who upgraded DoorDash
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shares to outperform from in-line late Tuesday and dubbed the company a “structural COVID winner.”
Mahaney is impressed by DoorDash’s ability to continue posting growth even amid a broader recovery for the food-and-beverage category, and he’s upbeat about the company’s DashPass subscription service, which has amassed 9 million members. In general, those who pay for subscriptions to gig companies’ services tend to be more frequent customers with bigger shopping carts.
The company’s subscription success “should materially hedge any deceleration in industry growth and provide a sizable channel for cross-selling grocery, convenience, etc.,” Mahaney said.
DoorDash has been expanding beyond food delivery into areas like grocery and convenience, and the company has made progress with its efforts thus far, according to Mahaney. And overall, he’s “reasonably confident there’s upside” to estimates for the fourth quarter of 2021 and first quarter of 2022.
Mahaney is less optimistic about fellow gig company Lyft Inc.
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While he continues to rate the ride-hailing stock at outperform, he added it to the “tactical underperform” list based on short-term dynamics.
“Our rationale is simple,” he said, as rising COVID-19 cases could limit the potential for fourth-quarter upside. Lyft is “a pure-play mobility-only stock” and data-points around flight searches and subway ridership could portend “headwinds” for Lyft in the current quarter.
Lyft shares are off 3.6% Wednesday, while DoorDash shares are up 0.4%.
