DoorDash (DASH) - Get DoorDash, Inc. Class A Report dropped sharply Monday after analysts at D.A. Davidson, the lone firm with coverage on the stock, downgraded the shares on valuation concerns amid a runup in the company's stock.
The firm lowered its rating to neutral from buy following the stock's 72% pop since its debut last week. The firm raised its price target to $150 from $93 a share.
"We believe DASH deserves a premium multiple due to its category leading scale, superior growth rate/market share gains, and early profit trends, but the stock's current valuation appears to leave little room for any performance hiccups in DASH's core biz over the next year (possible, in our view, due to increasing regulation and still elevated competition in Food Delivery) and perhaps gives DASH full credit for building out its promising-but-nascent grocery/essentials biz," said Davidson analyst Tom White.
DoorDash shares fell 13% to $152.75 in trading Monday.
The firm sees DoorDash as being the clear leader and a share gainer in the U.S. online food delivery category and is showing promising early signs toward meaningful cash flow and profits over time.
However, the stock's third-day closing price of $175 ashare values the company at about 13 times 2022 EV/sales, putting its multiple between 35% and 200% higher than the peak multiples of the company's peers including Grubub (GRUB) - Get Grubhub, Inc. Report, Uber (UBER) - Get Uber Technologies, Inc. Report and Lyft (LYFT) - Get Lyft, Inc. Class A Report.
On Monday, shares of fellow recently public tech company Airbnb ABNB also dropped after an analyst at Gordon Haskett downgraded the stock to underperform also based on valuation concerns following a post-IPO runup of the stock.