Urian B., Tech Times
DoorDash shares have risen by a whopping 16% just after news of the company’s plan to buy Wolt for $8.1 billion. The company plans to buy Wolt, an international food delivery platform, in an “all stock deal.”
DoorDash Lost 30 Cents Per Share
According to the story by CNBC, a recent announcement notes that DoorDash, which has massively benefited from the whole stay-at-home trends during this pandemic, reported a much wider than expected third-quarter loss per share. The company, however, was able to beat the estimates on revenue.
DoorDash had reportedly lost 30 cents per share but still ended up with a revenue of $1.28 billion. Analysts had expected a loss of 26 cents along with a $1.18 billion revenue. The company reportedly saw a net loss of $101 million which was more than double its previous loss of $43 million during the exact same quarter of 2020.
Shares Surged 24% After the News
Following the recent announcement, however, DoorDash shares have surged by over 24% during the after-hours trading, which followed the initial dip. The new customers that were acquired for the quarter dropped over peak levels back in 2020, which was above 2019 levels.
The deal with Wolt is reportedly expected to close during the second half of 2022. It is also expected that Miki Kuusi, the founder and CEO of Wolt, will be running DoorDash International. This particular Finland-based company already has 4,000 employees that are operating in 23 companies.
10 Million DoorDash Users in January
The company has already gotten over 10 million users in January. Gordon Haskett analysts noted that the acquisition would be able to help accelerate DoorDash’s own expansion into international restaurants, grocery, and retail within several years. However, this downgraded the stock from a buy to hold and lowered the price target from $243 down to $233.
Gordon Haskett analysts reportedly wrote that with near-zero insight regarding Wolt’s own financials, supporting DoorDash’s notably relative valuation premium. This followed an almost 20% share price jump regarding the news, which was stated as ‘not feasible at this time.”
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Analysts on DoorDash Shares Price
Wells Fargo analysts had notably raised the price target to a whopping $260 from $235. The analyst then stated that adding the Wolt team would then allow the delivery company’s management to continue focusing on the company’s strong US market. Back in 2020, a class-action lawsuit was filed against Uber Eats, DoorDash, and GrubHub for their “exorbitant” fees.
The analysts then added that Wolt is a good partner, especially when focusing on execution and efficiency. The analysts also mentioned that scrappy culture, strong retention, and frequency are the benefits of being partners with Wolt.
According to Financial Times, other “key executives” are now also going to join DoorDash. A new security update was implemented to connect DoorDash drivers to ADT agents to help them with the new emergency-assist button.
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Written by Urian B.
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