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DoorDash shares fall after earnings, Cramer flags Uber overlap trade
After its Aug. 5 second-quarter report, DoorDash shares closed up 2.9%, while Cramer argued shorting DoorDash on Uber was a bad trade amid strong cash flow and revenue growth.
DoorDash shares have been pressured since its second-quarter results, and CNBC host Jim Cramer used DoorDash and Uber to illustrate how overlap between the ride hailing and delivery models can lead to bad trades. According to the report, DoorDash shares are down 12.5% over the past year and 1.3% year-to-date, while the stock closed 2.9% higher on Aug. 6 following the Aug. 5 earnings release.
Cramer said the company was “the only one” not “trashed” during the earnings discussion, arguing many traders shorted DoorDash based on Uber weakness. The outlet attributed the setup to the perception of overlap between the two businesses, which Cramer characterized as a reason the trade went wrong for those positions.
The underlying quarter included multiple growth metrics highlighted in the article. DoorDash reported operating cash flow and free cash flow rising 87% and 109% to $944 million and $742 million, respectively, and orders increasing to $970 million, with revenue up 36% to $4.45 billion. Market gross order value, or GOV, also grew 36% to $33 billion.
Still, the piece also pointed to potential pressure points. It noted GAAP net income fell 30% to $200 million, research and development expenses rose 52% to $535 million, and DoorDash could face headwinds including regulatory action tied to gig worker minimum wages and inflation that may weigh on discretionary spending.
The article also covered Uber alongside DoorDash. It said Uber shares are down 17.9% over the past year and 8.3% year-to-date, closing 5% lower on Aug. 5 after second-quarter earnings, even as trailing free cash flow exceeded $10 billion for the first time, bookings grew 24% annually to $58 billion, and trips increased 18% to 3.87 billion. It added that revenue missed analyst estimates while earnings beat.