Tech sector layoffs come for DoorDash

"We were not as rigorous as we should have been in managing our team growth"

DoorDash has been on a rollercoaster since going public in December 2020. Or, at least, its stock price has.

In its first year on the public markets, DoorDash soared as high as $246 a share, thanks to a pandemic boom in demand for food and groceries delivered at home. In its second year, DoorDash erased those gains and then some. Shares have collapsed 77% from their December 2021 high, to around $57. DoorDash’s market cap stands at $22.2 billion, far less than the $71 billion valuation it debuted at, but still above any of its valuations in private funding rounds, which is more than many of its publicly traded peers in the gig economy can say.

Like those gig peers, DoorDash has yet to become reliably profitable. The company posted a one-off quarterly profit of $23 million in its IPO filing for Q2 2020, but has since failed to repeat that while its quarterly loss has now ballooned for five straight quarters. In the latest quarter, ended Sept. 30, DoorDash reported a net loss of $295 million on revenue of $1.7 billion. It did better when measured by its customized metrics with $420 million in contribution profit and $87 million in adjusted ebitda (honestly, why even have custom metrics if they don’t make you look good). Those results combined with a few other tidbits (U.S. market share up 14 percentage points; DashPass subscribers at an all-time high) were good enough for investors, who sent shares up 10% on earnings day.

The drag on the results was that net loss, which was even bigger than analysts expected, and nearly 3x the $101 million net loss from the same period a year ago. The spike in this quarter’s loss came from increased spending on costs and expenses:

• $931 million in cost of revenue, +59% year over year

• $418 million on sales and marketing, -6% y/y

• $226 million on research and development, +97% y/y

• $316 million in general and administrative, +69% y/y

• $118 million in depreciation and amoritization, +188% y/y