Is DoorDash Stock a Buy, Sell, or Hold on $3.9B Deliveroo Deal?

Wajeeh Khan Barchart Tue May 6, 1:47PM CDT
The DoorDash logo displayed on a smartphone atop a white plate_ Image by Diego Thomazini via Shutterstock_

DoorDash (DASH) shares are in focus this morning after the food delivery giant confirmed plans of buying its U.K.-based peer Deliveroo (DLVEY) for about $3.9 billion. 

The agreement is unlikely to face regulatory hurdles as DoorDash does not have a meaningful presence in any of the 10 core markets that Deliveroo currently serves.

However, the London-based company needs approval from at least 75% of its shareholders for this deal to go through. Deliveroo stock jumped more than 2% following the DASH news on Tuesday.

Significance of Deliveroo Acquisition for DoorDash Stock

DoorDash is spending billions on buying Deliveroo as the acquisition will help expand its footprint in Europe. 

Adding Deliveroo’s largest market, the United Kingdom, to its roster will position DASH as a more serious competitor to the likes of Uber Eats (UBER) and Just Eat (TKAYF) as well.  

Note that Deliveroo ended last year with about 7 million monthly active users in total. 

Together, the two companies will serve “more than 40 countries with a combined population of over 1 billion,” Tony Xu, the chief executive of DoorDash, revealed in a press release on Tuesday.   

Including today’s price action, DASH shares are up more than 20% versus their year-to-date low.

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Are DASH Shares Worth Buying at Current Levels?

DoorDash stock is worth buying at current levels because the food delivery giant has recently teamed up with Domino’s Pizza (DPZ).

According to Truist analysts, this strategic alliance could help DASH beat the current consensus for gross order value (GOV) by up to 70 basis points in 2025.  

The investment firm currently has a “uyB” rating on DoorDash with a price target of $235, which signals potential upside of about 25% from here.  

DASH shares are attractive at writing also because the Nasdaq-listed firm reported market-beating EPS for its Q1 and issued upbeat guidance for its current quarter on Tuesday. 

What’s the Consensus Rating on DoorDash?

Other Wall Street analysts are bullish on DoorDash stock for the next 12 months as well. 

The consensus rating on DASH currently sits at “Moderate Buy” with the mean target of about $218 indicating potential for another 16% rally from current levels.         

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On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.