DoorDash stock continued to drop on Thursday following the San Francisco-based delivery company’s release of its Q1 earnings which showed higher-than-expected losses, resulting in a double-digit decline in after-hours trading.
Shares plummeted by more than 15% after the market closed on Wednesday and dipped further on Thursday morning, dropping from its Wednesday high of $131.94 to $110.31 by mid-morning.
The decline in investor confidence stems from the company’s reported first-quarter net loss of $25 million. While an improvement over net losses of $162 million, or $0.06 per share, in Q1 2023, it exceeded analyst expectations of $0.03 per share.
Gross order value, the total value of all orders, was up 21% year over year to $19.2 billion, and the company forecasted a GOV of $19 billion to $19.4 billion in Q2. Adjusted EBITDA increased to $371 million for the quarter, up from $204 million year over year.
Despite DoorDash’s stock value tumbling, the company reported increases in total orders, up 21% year over year to $620 million, and revenue, up 23% year over year to $2.5 billion.
DoorDash reported growth of more than 100% year over year in its U.S. grocery category but said it took a hit in Seattle and New York City due to “new earnings standards” — both cities recently imposed minimum wage hikes on delivery services like DoorDash, with New York City requiring companies to pay $17.96 an hour or 50 cents per minute, and Seattle imposing an hourly wage of $26.40.
The change prompted the company to raise fees on restaurant merchants in New York City.
“Based on an analysis of data following implementation of the new earnings standards, we estimate local merchants will earn at least $40 million less annually from the DoorDash marketplace in Seattle and at least $110 million less annually from the DoorDash marketplace in New York City due to the new earnings standards,” the company said in its earnings report. “For Dashers, wait times between orders have more than tripled in Seattle and the number of new Dashers in New York City has fallen by 20% compared to before the new earnings standards took effect.”
DoorDash said the two cities combined represent less than 1% of the company’s total orders.
