Needham Retains Conviction On DoorDash Despite Amazon's Collaboration With Rival Just Eat

  • Needham analyst Bernie McTernan believes DoorDash, Inc DASH can leverage its leadership position in restaurant delivery to become one of the leading, horizontal, on-demand, last-mile fulfillment providers in North America. 
  • He thinks DASH will be able to deliver all goods that consumers need within an hour, have an expiration date, and/or are produced by a local vendor.
  • The collaboration with Amazon Prime members having access to GrubHub+ for free for a year is a headline negative for DASH and Uber Technologies, Inc UBER
  • At a minimum, this is another sign of a more aggressive third player (for at least a year) and, at maximum, a more realistic threat of competing against Inc AMZN in more delivery verticals. 
  • The actual result on DASH and UBER will depend on how aggressive AMZN is in marketing the partnership. As of now, he did not see it on the Amazon homepage. 
  • His view of Grubhub approaching AMZN from a position of weakness and Grubhub's expectation that the promo will be neutral to earnings and FCF likely points to a potentially more muted impact on DASH/UBER results. 
  • However, this will likely be a key question for the companies as they head into 2Q earnings.
  • McTernan maintained DoorDash, Inc with a Buy rating and a price target of $100 (46% upside).
  • Price Action: DASH shares traded lower by 7.06% at $69.62 on the last check Wednesday. UBER shares traded lower by 2.95% at $21.86.

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