DoorDash shares were down 3.3% to $152.80 per share in afternoon trading.
"There is no business that is more commoditized and competitive than having food delivered from the restaurant to your home. There is zero differentiation between Uber Eats, Postmates, Caviar, Grubhub, DASH, or any local provider. Even worse, this business model has no brand loyalty as the consumer just picks who will deliver their food for the cheapest price," the report said.
As an example of the fierce competition in the food delivery segment, the firm noted that after DoorDash added a $1.50 fee in Chicago to offset a restaurant fee cap, GrubHub (GRUB) - Get Grubhub, Inc. Report announced it would eliminate customer fees this winter.
Citron estimates DoorDash should be valued closer to $40 per share, nearly a quarter of its post-IPO $50 billion valuation.
DoorDash's rivals are trading in a valuation range between 3x and 6x sales, DoorDash is trading at 19x sales.
DoorDash raised capital less than 6 months ago at a valuation of $16 billion, since then nothing has changed, according to Citron.
"It’s clear that day traders have recklessly bid up DASH’s stock price without doing the proper due diligence," the report said. "These same people that were betting on DASH blindly should have read the company’s S-1, which clearly states that growth has PEAKED."
The company's S-1 filing with the Securities and Exchange Commission states that the increase in total orders stemming from the coronavirus pandemic and subsequent lockdown "may not continue in the future, and we expect the growth rate in total orders to decline in future periods."