DoorDash (DASH.US) tumbles after earnings: Q3 profit falls short, massive spending plans spark growth anxiety.

The largest food delivery service platform in the United States, DoorDash (DASH.US), released its third-quarter financial report with revenue and order value exceeding expectations. However, due to continuous rise in operating costs resulting in lower than expected profits, as well as investor caution towards its increasing expenses, the company's stock price plummeted after hours. The financial report showed that in the three months ending on September 30, total order value increased by 25% to $25 billion, surpassing analysts' average estimate of $24.6 billion. This growth marks the largest increase since mid-2023, and DoorDash attributed it to the "strong growth" in monthly active users. Currently, DoorDash has expanded its business to more than 40 countries through its Wolt business and the recent acquisition of Deliveroo. Revenue grew by 27% year-on-year to $3.45 billion, also exceeding the market expectation of $3.36 billion. However, DoorDash's total costs and expenses in the third quarter surged by 23% year-on-year, from $2.6 billion to $3.19 billion. Although net profit increased significantly from $162 million (38 cents per share) in the same period last year to $244 million (55 cents per share), earnings per share fell short of the market's expectation of 69 cents. On Wednesday, the company also stated in a statement that it expects to increase investment in new products by "several hundred million dollars" in 2026 compared to this year, and will also invest in internal platforms to enhance operational stability and product development speed. The company said this includes AI tools to improve developer efficiency. "DoorDash's massive spending plan is worth paying attention to, it is a risk game," said eMarketer analyst Zak Stambor, "but it may bring substantial returns." After the stock market closed on Wednesday, DoorDash's stock price plunged nearly 20%. As of Wednesday's close, the stock has risen 42% year-to-date. Several tech companies have announced plans to significantly increase spending this earnings season, all of which have prompted cautious responses from investors. Meta (META.US), after warning that next year's capital expenditure will be "significantly higher" than after 2025, saw its stock price plummet the next day, marking the largest drop in three years. To explain the reason for the increased spending, DoorDash figuratively said in its financial report statement: "We all hope that children can grow up to be adults without investment, or grow strong overnight, but there are no shortcuts in either life growth or business operations." DoorDash admitted that it will face the dual pressure of direct costs and opportunity costs in the short term, but its strong cash flow gives it confidence to increase investment in areas of growth, including competitive areas such as grocery and retail delivery. Over the past year, the company has conducted a wave of billion-dollar acquisitions to expand its international business and restaurant-facing enterprise services. The company completed the acquisition of Deliveroo in October, expanding its business footprint on the European continent. In addition, following the acquisition of SevenRooms for $1.2 billion, DoorDash has added restaurant reservation features in the US and Australia, and expanded its software solutions for restaurant operators. In another business line, DoorDash has been investing in autonomous delivery models, including the launch of internally developed delivery Siasun Robot & Automation, and partnership with Alphabet Inc. Class C's (GOOGL.US) Waymo, ultimately achieving autonomous delivery services. DoorDash said, "While we expect cost optimization to be achieved in the long term as our global business scales, we believe that the biggest opportunity to create long-term returns on the Deliveroo business lies in investments in talent and products, thus creating a better experience for consumers, merchants, and delivery drivers." Looking ahead, the company expects momentum to continue with Deliveroo's performance included in the financial statements. Total order value for the fourth quarter is expected to be between $28.9 billion and $29.5 billion; adjusted EBITDA is expected to be between $710 million and $810 million. The company stated that this profit guidance includes Deliveroo's contribution of approximately $450 million, and it is expected that by 2026, Deliveroo will add about $200 million to adjusted profits.