Home Stock DoorDash is spending $8.1 billion to accelerate its international growth

DoorDash is spending $8.1 billion to accelerate its international growth


Shares of DoorDash Inc (NYSE: DASH) opened more than 15% up this morning on an announcement that it’ll buy Wolt for $8.1 billion in stock to accelerate its international growth.

The transaction is expected to close in H2 of 2022

Wolt is a Finland-based platform that delivers food, groceries, and even retail items. The delivery business serves more than 10 million users in 23 countries with over 4,000 employees. Its agreement with DoorDash is expected to close in the back half of 2022.

According to DoorDash, Wolt CEO Miki Kuusi will lead its “international” business upon completion of the acquisition.

Morningstar’s Mogharabi comments on the acquisition

On CNBC’s “Closing Bell”, Morningstar’s Ali Mogharabi said the acquisition made sense from a “strategic standpoint” as it’ll help DoorDash compete better against rivals, including Uber Eats and Just Eat Takeaway.

This is a firm that is dependent on a network effect competitive advantage. So, they need to strengthen that network effect, and the way to do that is consolidation. On top of that, you’d expect growth rate to decelerate post-pandemic. So, they needed to expand in additional areas.

Such acquisitions, he added, are necessary in the delivery space to maintain market share. Mogharabi has a “sell” rating on DoorDash with a price target of $142 that represents a 35% downside from here.

Key takeaways from DoorDash’s Q3 earnings report

Also on Tuesday, DoorDash reported its financial results for the third quarter. The online food ordering and delivery company topped Street estimates for revenue but lost 30 cents a share – wider than 26 cents that analysts were expecting.

At $101 million, its net loss more than doubled on a year-over-year basis. The number of new customers it added in Q3, DoorDash disclosed, was down compared to last year but still up from the 2019 equivalent.

The post DoorDash is spending $8.1 billion to accelerate its international growth appeared first on Invezz.

You may also like