PreMarket Prep Stock Of The Day: DoorDashing For The Exit?

PreMarket Prep Stock Of The Day: DoorDashing For The Exit?

When a company offers up good news to the Street, you have to be careful they're going to react to it. In the case of DoorDash Inc. DASH, investors that reacted too quickly to its raised guidance are at least in the short term regretting that purchase. The price action in the issue following Wednesday’s raised guidance makes it the PreMarket Prep Stock Of The Day.

Fall From Grace: DoorDash made its all-time high last November at $257.25. It repelled off that level to end the year at $148.90 and the decline was just getting started. Its all-time low was made May 12 at $57.60. The rebound from that was capped on Tuesday at $81.44 and ended Tuesday’s session at $76.91. The highest close for the rally was last Friday at $78.09.

The News: Before the open on Wednesday, the company updated its outlook in connection with the closing of Wolt Acquisition, forecasts combined Q2 marketplace GOV $12.8B-$13 billion and adjusted. EBITDA $0-$100 million.

The raised guidance was primarily due to stronger than expected order frequency along with average order values.

Crickets And PreMarket Prep Take: When the news broke just after 6 a.m. EST, the issue was at the $77 area and barely budged. When it was being covered on the show, it was trading at the highs of the premarket session at $77.70 on very light volume.

Co-host Dennis Dick inquired: “Does this company have a path to profitability? I like the concept. The valuation has always been insane and I am not chasing at these levels.”

The author of this article noted this issue was not traded actively and noted Tuesday’s high as major resistance. On the downside, potential support was noted at the pair of lows at the $75.50 area from last Friday and Tuesday.

Not Such Good News: Investors utilized the news to exit the issue in a big way. After a slightly higher open ($77.20 vs. $76.91) and continued up to $77.44 and sharply reversed course. The ensuing decline sliced right through the $75.50 area and kept on going lower.

As of 3:50 p.m. EST, it declined to $69.70 and has rebounded back to the $72.30 area.

The discussion on the issue from Wednesday’s show can be found here:

Posted In: NewsGuidanceTechnicalsTrading Ideas

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