DoorDash warns the COVID vaccine will likely slow its business
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Delivery service DoorDash warned that its rapid growth, partly fueled by the coronavirus pandemic, will likely slow as more people are vaccinated and restaurants open more widely for dine-in service.
“If you were vaccinated tomorrow and restaurants were open, you’d likely go out” instead of ordering delivered meals, Prabir Adarkar, DoorDash’s chief financial officer, told Fortune.
During its first earnings call as a public company on Thursday, the company said that the money it collects on orders will likely decline during the second and third quarters, when the vaccine is expected to be more widely available, compared to the first quarter. It added that its financial outlook for 2021, during which it expects to handle $30 billion to $33 billion in orders, is “highly uncertain.”
“The reality is there is a significant amount of uncertainty with respect to exactly what happens in the near-term,” Adarkar said.
But further out, he said, DoorDash’s growth is more certain. “When you step back over the long-term, we think that, given how underpenetrated we are, that that’ll continue resulting in growth despite the ups and downs,” Adarkar said.
DoorDash’s stock fell more than 5% to $166.87 following the tepid guidance it gave investors. The company’s shares are up 64% since its blockbuster initial public offering in December, but down about 8% from where they initially traded.
On Thursday, DoorDash reported fourth-quarter revenue of $970 million, or nearly quadruple from the same period a year earlier. It also said losses ballooned to $312 million, up from $134 million loss. DoorDash blamed much of that loss on $322 million in stock-based compensation, taxes, and other costs associated with its initial public offering.
But as the COVID vaccine more widely available and the weather warms in the spring and summer, more people are expected to dine out. DoorDash said the total number of orders and the average amount people spend on their orders will likely decline.
The good news for DoorDash and its customers is the caps that many cities placed on delivery commissions and fees to help struggling restaurants will likely be lifted as more cities reopen. During the the fourth quarter, DoorDash said it served 73 jurisdictions that had price caps, up from 32 in the previous quarter. DoorDash said that it passed some of those costs to customers in the affected areas, and they will go away when then caps are lifted.