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North America's food delivery giant DoorDash released a strong Q4 earnings report after hours on Wednesday, following which the stock soared more than 27% in after-hours trading. This was a rare increase after the stock fell from its high of $257 per share in November last year to the current level of $94.
(DoorDash weekly chart from Investing.com)
This food delivery company, which experienced explosive growth during the pandemic, was one of Wall Street's hottest "pandemic stocks." When DoorDash went public in the U.S. in December 2020, it was one of the largest IPOs in the U.S. that year, with its stock price skyrocketing and market capitalization surpassing $50 billion at one point. The platform also became the largest food delivery service in the U.S., capturing over 50% of the market share.
However, as vaccines were widely distributed across Europe and the Americas and economies reopened, people began returning to restaurants. At this point, companies that had benefited significantly during the pandemic started to see their performance slow down. DoorDash is one such pandemic stock that raises concerns.
According to data from Investing.com, after reaching a high of $257 in November last year, the company’s stock began to plummet rapidly, eventually falling below its IPO price of $102. By Wednesday's close, the cumulative decline had reached 63%.
So, will DoorDash's stock price really rebound after an earnings report that wasn't much better than market expectations? Is this 27% after-hours gain a 'flash in the pan' or the start of another surge?
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Let's first take a look at this earnings report:
In the fourth quarter, DoorDash's Q4...