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When I originally looked at DoorDash back in the 2022-23 time frame, I firmly believed that it would end up being a "pandemic stock". This is what we called companies that benefitted greatly from the 2020-22 period of people working at home and foregoing travel to avoid catching COVID-19. Many firms that already specialized in providing services at home prospered during this time, but as investors we needed to be wary of how these businesses might fall off when life returned more to "normal".

And, in fact, many indeed fell off sharply from highs during the pandemic period. Zoom (ZM) reached highs over $400 a share before crashing back down under $50. Peloton (PTON) dropped from $150 to trading under $1. Teledoc (TDOC) traded near $250 before plummeting under $5. There are several other examples.

Being aware of this trend, I wanted to steer investors away from another company that benefited from the COVID days: DoorDash (DASH).

It seemed logical at the time that DoorDash would have trouble maintaining its growth of 2020-22. Food and grocery delivery was a godsend during the pandemic, allowing people to stay "socially distanced" while still enjoying their favorite restaurants - and keeping those restaurants in business.

Well, that thinking simply turned out to be wrong. DoorDash has proven that it can operate - and be hugely successful - even in more "normal" times. In re-reviewing the stock - which has been a Green Screen staple since inception - I found a very compelling business indeed.

So, let's dive back into DoorDash and see if this is one that might warrant a Watch List recommendation!

The Business

DoorDash is a "3 sided" delivery network, comprising of merchants (restaurants mainly, but also grocery and convenience stores), delivery drivers (treated as independent contractors), and consumers. Through its smartphone app or website, consumers can order items from a restaurant or store, which is then delivered to them without having to get up off the sofa. DoorDash's network is massive: 50 million consumers placing nearly 3 billion (!) orders annually from 1 million suppliers, and delivered by a network of close to 8 million drivers.

The company monetizes its network in several ways:

• Its largest revenue source (over 50%) are commissions charged to merchants, usually 15-30% of each order.
• A myriad of service fees are collected from the consumer on each transaction (delivery fee, service fee, etc.).
• DashPass subscription fees, monthly charges that reduce per-order charges for frequent "Dashers" (26 million and rising).
• Sponsored listing fees allow merchants to get more visibility on the app.
• Software and logistics services for merchants to build out their own "white label" delivery offerings.

Growth and Revenue Recurrence

This is a recurring revenue business, mostly of the "toll booth" variety. Orders per user per year has risen from 39 in 2020 up to about 70 in 2025, a 10% annual growth rate and a good indication that customers and merchants stick strongly to the network. 70 orders a year implies more than one DoorDash order a week, a substantial rate of recurrence.

DashPass subscription fees, which are likely close to 10% of revenue, are also traditionally recurring as they are ongoing monthly charges.

Growth has been outstanding. Post-pandemic (2023 to today), DoorDash has grown revenue over 25% annualized. Some of this is due to the Wolt acquisition in 2022. Wolt is essentially continental Europe's version of DoorDash, and it has been a successful purchase - Wolt revenues have grown over 200% since the close. DoorDash recently closed on the acquisition of Deliveroo, the "DoorDash of the UK", completing its European invasion.

Considering the order rate growth, and adding in pricing growth, I expect DoorDash can continue to grow at 10-15% rates over the next 5+ years, more than that when accounting for acquisitions. Analysts estimate a global total addressable market of $300 billion for food and grocery delivery, growing at over 10% a year. That's an attractive growth market to operate in. I don't see growth as a major challenge here.

Moat Evaluation

DoorDash's moat comes from powerful NETWORK EFFECTS. It is far and away the largest delivery marketplace in North America, with 65% market share (its only real competitor, Uber Eats, has half that). This creates a flywheel effect. Consumers download the DoorDash app because it has the most restaurants and stores to order from. Merchants join DoorDash in order to access the largest customer base. And delivery drivers prefer DoorDash because it gives them the largest volume of orders to choose from. While all 3 can be on multiple networks, the largest tends to win the bulk of business, and that's what we are seeing in food delivery.

When comparing DoorDash to its competitors, it's pretty much a blowout. Dash has grown orders per year by over 10% annually since 2020, compared to Uber's 3% and GrubHub's 1%. Total order volume has grown 26% annually in that same period, crushing the single-digit growth rates of its primary competitors. Market share has grown from 45% in 2020 to 65% today - Uber's has remained more or less flat over that same period, and GrubHub's has fallen off a cliff.

I believe DoorDash's dominant network gives it a considerable moat, one that is likely to get even stronger as years go by.

Leadership and Financials

DoorDash has a founder-led culture. Co-founder Tony Xu still sits as CEO, and has since the company's inception in 2013. He has about a 6% economic stake (worth over $6 billion), and controls super-voting shares that give him close to 70% voting power. Only in his early 40's, Xu has a long tenure ahead of him, if he wants it. Other co-founders Andy Fang and Stanley Tang continue to hold leadership positions as well. DoorDash is in excellent hands. These guys clearly know what they are doing.

I have no concerns financially, either. DoorDash just recently drew $2.8 billion in long-term debt to buy Deliveroo, but it represents less than 28% of equity and is dwarfed by nearly $11 billion in cash. Cash flows have turned solidly positive, exceeding 15% free cash margins in each of the past 3 years (including 2025). There is no near-term financial risk here.

Risks

We haven't really seen how DoorDash would be affected by a true recession. So far, a lot of consumers seem to be more than willing to pay 20-40% more for food and groceries to have it delivered to them. When money is tight, it is fair to wonder how elastic that demand will be.

Competition from Uber is significant. By way of its ride sharing business, Uber is 4-5 times larger than DoorDash, and Uber Eats has a much larger international footprint, operating in over 50 countries. While DoorDash is 80-85% domestic, Uber Eats earns more than half of its business internationally. Ultimately, growth potential is going to move outside of established markets, and DoorDash continues to play catch-up outside of North America.

Finally, a law mandating classification of drivers as full-time employees would cause a lot of extra expenses and meaningfully affect margins. There has been noise around this for years, and it seems unlikely at this point, but is still a regulatory risk to be aware of.

Conclusion

DoorDash has proven that convenience continues to win in consumer markets, even at a premium. There is no longer any question of whether its business works outside of the pandemic environment - it clearly does. With that question answered, everything else about the company falls into place. It is clear it meets all of our criteria for a "green dot" stock: strong ongoing growth, recurring revenues, a strong moat, and a reliable leadership team.

The question then becomes: what is the stock worth? Modeling for about 20-25% near-term revenue growth, with a 16.5% free cash margin, a high 11.5% discount rate, and average share dilution of 4%, I get a target price of $185/share for DASH. With the stock trading near $230, it is a bit rich to consider buying. We will park DoorDash on the Watch List for now and see if we get a chance to buy it going forward.

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