By Mariapaula Gonzalez
DoorDash stock tumbled Tuesday after Jefferies downgraded shares of the deliverer of food and groceries on valuation concerns.
A team of analysts led by John Colantuoni lowered their rating for DoorDash stock to Hold from Buy, but raised the price target to $250 from $235, while lifting estimates for earnings before interest, taxes, depreciation, and amortization.
"With the stock up 45% YTD and valuation at a 120% premium to Internet [sector], we downgrade to Hold given DASH's strong execution and growth algorithm appear fully reflected," the analysts wrote.
DoorDash didn't immediately respond to a request for comment about the downgrade.
Shares of DoorDash are down 2.6% to $236.46 in Tuesday morning trading, while the S&P 500 index is up 0.2%.
Analysts also expect that DoorDash's recent emphasis on affordability initiatives could impact the company's future revenue growth. DoorDash has offered more promotions and discounts to customers, and reduced fees for customers not enrolled in DashPass, the company's subscription service that offers discounts.
Affordability measures attract customers, but it might mean that DoorDash earns less profit from each order, the analysts write. Making ordering cheaper for customers means the company receives a smaller cut from each order, which would cap how much their revenue can grow, even if order volume increases.
Despite this, analysts see growth outside the U.S. for DoorDash, which operates in more than 30 countries.
"DASH's exposure to a large addressable market and history of share gains should support growth in the U.S. restaurant delivery, which we see supplemented by faster growth in international restaurant delivery and new verticals," the analysts wrote.
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July 15, 2025 10:17 ET (14:17 GMT)
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