DASH stock drops 8.62% despite record Q1 earnings and two major acquisitions

DoorDash, Inc. (NASDAQ: DASH) stock dropped 8.62% to $187.69 in early trading on May 6, despite the company posting record first-quarter earnings

Despite posting record first-quarter earnings and announcing two major acquisitions, DoorDash, Inc. (NASDAQ:DASH) saw its stock drop by 8.62% early Friday. The food delivery giant reported strong year-over-year gains in revenue and profit, but the sharp decline in shares after the earnings announcement reflects investor concerns about the company’s aggressive global expansion plans.

Here's a breakdown of DoorDash's earnings highlights for the first quarter of 2025:

* Revenue came in at $3 billion, a 21% increase from the same period last year.

* Total orders grew 18% to 732 million, while Marketplace Gross Order Value (GOV) rose 20% to $23.1 billion.

* Net revenue margin remained at 13.1%.

* GAAP net income reached $193 million, a significant turnaround from the $23 million net loss reported in Q1 2024.

* Adjusted EBITDA also improved to $590 million, up from $371 million a year earlier.

* The company attributed these gains to its focus on delivering better products for consumers, merchants, and delivery drivers.

“We are pleased to report strong first-quarter results that demonstrate the continued momentum of our business as we create the best possible DoorDash experience for consumers, merchants, and drivers,” said Tony Xu, CEO of DoorDash. “We remain focused on driving sustainable long-term growth and believe that we are well-positioned to do so in the years ahead.”

In addition to its quarterly results, DoorDash announced that it will acquire U.K.-based Deliveroo (LON:ROO) for about $3.86 billion. The deal will give DoorDash access to nine European markets and expand its user base to 50 million across 40 countries.

Deliveroo has faced tough competition and recently pulled out of several markets, including the Netherlands, Portugal, and Spain, as it struggled to maintain profitability amid rising inflation and consumer spending cuts. The company, known for its signature teal and white delivery bags, has faced stiff competition from rivals such as Just Eat and Uber Eats.

Earlier this year, Deliveroo rejected a takeover bid from British supermarket chain Tesco (LON:TSCO) and pulled out of several European markets as part of a plan to cut costs and focus on profitability in its core markets.

However, Deliveroo’s share price has since dropped over 50% until DoorDash’s takeover offer. Meanwhile, the U.S. firm is expanding rapidly in the Asia-Pacific region, recently launching operations in South Korea and planning to enter Japan.

The deal, which is subject to approval by Deliveroo’s shareholders and relevant authorities, is expected to close in the fourth quarter of 2025.

Moreover, DoorDash is acquiring New York software firm SevenRooms for $1.2 billion in cash. The company provides customer relationship management (CRM), reservations, and guest management tools for hotels and restaurants, counting brands like Marriott (NASDAQ:MAR), MGM (NYSE:MGM), and Hyatt (NYSE:HPH) among its clients.

The acquisition is expected to help DoorDash diversify beyond food delivery and expand its B2B commerce platform. SevenRooms is also expected to benefit from synergies with DoorDash’s existing operations and technology.

“We are excited to welcome the SevenRooms team to DoorDash,” said Xu. “Together, we will be uniquely positioned to serve the broader hospitality industry with a comprehensive suite of products and services that will help businesses of all sizes thrive in today’s dynamic environment.”

The deal is expected to close in the second half of the year, subject to regulatory approval.

Despite strong operational performance, the stock’s sharp drop signals caution among investors about the costs and risks involved in both acquisitions.

Shares of DoorDash are down more than 30% over the past six months and currently trade below their 1-year target estimate of $218.84, according to Bloomberg.

After a turbulent period following its 2021 IPO, Deliveroo encountered difficulties in several European markets, leading to a significant decline in its share price. However, the company’s performance in the United Kingdom has remained relatively stable.

Despite reporting a 7% increase in first-quarter revenue and a 30% surge in adjusted operating profit, Deliveroo’s stock slid 10% on Friday. The company also cut its outlook for the full year, citing a slower-than-expected recovery in consumer spending from the pandemic.

As inflation continues to rise and consumers become more price-sensitive, they are expected to favor British supermarket chain Tesco’s Club Essentials own-label brand products over more expensive brands.

Earlier this year, Tesco pulled out of a partnership with British food charity FareShare after the supermarket giant announced plans to focus on reducing food