American food delivery services provider DoorDash Inc. (DASH) has stalled its plans to invest in the German delivery start-up Gorillas Technologies GmbH, according to Bloomberg. DoorDash had planned to invest $400 million in the startup, valuing the company at about $2.5 billion. Shares of DASH closed up 1.1% at $184.08 on August 20. (See DoorDash stock charts on TipRanks)
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DoorDash has been on the hunt to expand its operations internationally through acquisitions in Europe. Both DoorDash and Gorillas had already signed a letter of intent, but the deal fell apart due to differences over Gorillas’ expansion plans. Notably, DoorDash wanted Gorillas to focus first on reducing its losses in its European operations and slow down its expansion plans in the U.S.
Gorillas is one of Europe’s fastest-growing online grocery delivery startups and promises to deliver groceries within 10 minutes to the customer’s doorstep.
Gorillas was started in 2020 when the COVID-19 pandemic boosted the online delivery services sector, with billions of dollars being invested in such companies by venture capitalists.
As per Pitchbook, after raising about $300 million in March from investors, including DST Global, Coatue Management, and Tencent Holdings Ltd., Gorillas’ valuation has crossed the $1 billion mark.
Today, Wells Fargo analyst Brian Fitzgerald reiterated a Buy rating on DASH with a price target of $235, implying 27.7% upside potential to current levels.
Fitzgerald said, “We believe DASH endeavors to develop into a ‘decentralized’ alternative to AMZN’s more vertically integrated eCommerce model, an omni-channel delivery platform, helping brick-and-mortar businesses compete, succeed, and rapidly flourish in rapidly changing times.”
The analyst noted that DASH’s gross order volume (GOV) total addressable market is large, with about $600 billion of U.S. restaurant food sales annually and $1.3 trillion of U.S. grocery and consumables spend annually.
Moreover, the analyst believes that DASH is a multi-year hypergrowth story, with online channel penetration still at or below 10% and a lot of scope for an upward trajectory.
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 9 Buys and 4 Holds. The average DoorDash price target of $201.36 implies 9.4% upside potential to current levels. Shares have gained 32.3% year to date.
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