DoorDash Q4 Earnings: DASH Nears Possible Technical Support Ahead of Results
DoorDash Q4 Earnings: DASH Nears Possible Technical Support Ahead of Results
- DoorDash is scheduled to report earnings on Wednesday, February 18, after the market close.
- DASH stock is down 30% since the start of the year, extending declines from the fourth quarter of last year.
- DoorDash’s implied volatility rank (IVR) trades in the high 80s, offering a healthy premium for traders to bet on earnings.
DoorDash to report Q4 results after stock drops 30% since the start of the year
DoorDash (DASH) is scheduled to report fiscal fourth-quarter results on Wednesday, February 18, after the market close. It’s been a terrible year so far for the food-delivery company, with its stock price down about 30% since the start of the year.
Still, DASH remains nearly 300% higher since its late 2022 lows. The stock made an all-time high last October at 285.50, but investors began selling heavily as valuation and growth concerns weighed on sentiment.
DoorDash, per traditional metrics, remains overvalued. The price-to-earnings ratio was just above 80 as of February 17. That is high compared to some of its competitors. Competition in the small orders space has become much more crowded in recent years. Walmart has rapidly injected itself into the space, and rivals remain strong.
Maplebear (CART), the operator of Instacart, reported impressive results last week, sending shares over 9% higher last Friday. CART was also down nearly 30% since the start of the year, reflecting consumer sentiment over a questionable economic backdrop. However, CART isn’t as overvalued as DASH. CART trades around a P/E ratio of 20.
That said, the market may not reward DASH as much even if it reports healthy numbers. One thing investors don’t want to see is more spending. Last year, DASH announced a large increase in costs to invest in new initiatives this year. The market wasn’t a fan and the stock price fell by over 17% following the announcement. Investors will likely want to see some moderation in spending plans and positive early results from the increase in spending.
What do traders expect?
According to TradingView, analysts expect earnings per share (EPS) to come in at $0.59 on $3.98 billion in revenue. That would compare to an EPS of $0.33 on $2.87 billion in revenue a year ago. Last quarter, EPS came in at $0.55 on $3.45 billion in revenue.
DASH managed to beat revenue expectations last quarter, but it missed on EPS. That, along with the increased spending plans, punished the stock price. Another miss on EPS or on revenue could result in a selloff following the earnings announcement.
Trading DASH earnings
DASH traded with an implied volatility rank (IVR) of 89.5 on February 17. That means volatility is elevated compared to the previous twelve months of trading. That volatility has rapidly expanded since the start of the year as the stock price dropped.
Technically, prices are approaching the 2025 lows of 155.40. Options traders see an expected move of +/- 19.93 points, which would take DASH below that 2025 low if earnings result in a selloff.
Still, the level could offer some technical support if the numbers are conducive to a turnaround. Nonetheless, the high IVR offers options traders plenty of premium to sell for those who want to take a directional bet on the stock.
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