Should You Buy the Dip in DoorDash Via ETFs?

On May 6, 2025, the online food ordering and delivery company DoorDash Inc. DASH reported Q1 earnings of $0.44 per share, beating the Zacks Consensus Estimate of $0.40 per share. This compares to a loss of $0.06 per share a year ago.However, the company posted revenues of $3.03 billion in Q1, missing the Zacks Consensus Estimate by 1.96%. Sales rose 20% year over year. Meanwhile, the total value of orders placed on DoorDash's marketplace grew 20% year over year to $23.1 billion. That was ahead of estimates of $22.9 billion.Apart from slightly lower-than-expected revenues, the company’s guidance came up as downbeat. DoorDash projected adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $625 million at the midpoint of its range. That was below the previous forecasts for adjusted EBITDA of $639 million, according to FactSet, as quoted on investors.com.Due to mixed results, DASH shares slumped about 7.4% in the key trading session on May 6. Dash stock is up about 11.4% this year and has surged about 62% over the past year.Flurry of Deals in PipelineDomestic Deal: DoorDash-SevenRoomsDoorDash is acquiring New York-based SevenRooms, a company that provides restaurants with tools for managing reservations, marketing and guest experiences, for $1.2 billion.SevenRooms’s best-in-class CRM and guest experience toolswill be integrated into DoorDash’s broader "Commerce Platform." The deal would allow DoorDash to offer merchants "new tools to grow in-store and delivery sales."International Deal: Deliveroo TakeoverMeanwhile, British food delivery firm Deliveroo said it has agreed to a takeover offer from its American rival DoorDash that values the company at £2.9 billion ($3.9 billion). DoorDash, through its 2022 acquisition of Wolt, already operates in about 28 countries, mainly across Europe. The Deliveroo deal will create a combined company operating in over 40 countries.Time to Buy the Dip in the Stock?Analysts responded positively to DoorDash's planned acquisition of Deliveroo, noting limited market overlap between the two companies, which could ease regulatory concerns and enhance growth opportunities.Deliveroo’s primary markets include the UK, Ireland, France, Belgium, Italy, Kuwait, Qatar, Singapore, and the UAE. DoorDash management emphasized the benefits of combining operational strengths with Deliveroo’s local market expertise to drive innovation and growth.With UK stocks trading at a cheaper valuation, we believe the Deliveroo deal is well-timed. Note that the average company in the S&P 500 trades at 20 times its annual earnings (if we rule out highly valued tech giants like Alphabet, Apple and Microsoft from the equation). In contrast, FTSE 100 companies are valued at just 12 times earnings—less than half, as quoted on BBC.Any Downside in the Stock? DoorDash’s business model is not recession-proof. The company charges a service fee to operate its platform. If a tariff-driven recession or economic slowdown hits the United States, demand for these services may decline, and consumers may opt for in-person pickup from restaurants instead.However, DoorDash is expanding its global footprint. Rather than relying solely on the U.S. market, it is targeting international markets that are not currently expected to enter a recession or experience significant slowdowns.Also, DoorDash shares are considered significantly overvalued. The stock is currently trading at a trailing 12-month (P/E ttm) ratio that is 44 times higher than the P/E of the Internet – Services industry. While the stock carries a very poor Value Score of F, it holds the best Growth Score of A.Time to Buy DoorDash Via ETFs?With high valuation being a concern and growth prospects seeming lucrative, investors can try the exchange-traded fund (ETF) route to play DoorDash shares. The ETF, or the basket approach minimizes company-specific risks.DASH has exposure to ETFs like Invesco Leisure and Entertainment ETF PEJ, First Trust US Equity Opportunities ETF FPX, and Invesco Food & Beverage ETF PBJ. The average weight of DASH in these ETFs is more-or-less 5%. The ETF PEJ is down about 5% this year, while FPX has gained 1.7%. The ETF PBJ has added about 0.9%.  Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco Leisure and Entertainment ETF (PEJ): ETF Research Reports First Trust US Equity Opportunities ETF (FPX): ETF Research Reports Invesco Food & Beverage ETF (PBJ): ETF Research Reports DoorDash, Inc. (DASH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks