Cantor Fitzgerald’s Top Internet Stocks: Best Stocks To Buy According To $13.2 Billion Firm

6. DoorDash, Inc. (NASDAQ:DASH)

Number of Hedge Fund Holders In Q2 2024: 67

Share Price Target Upside: 23%

Cantor’s Rating: Overweight

Cantor’s Share Price Target: $160

DoorDash, Inc. (NASDAQ:DASH) is a food delivery company that has leveraged the internet to exploit the need of working individuals to easily access meals. This specialty business model provides the firm with a wide moat, and it also removes some of the cyclical trends from its shares. Data from Bloomberg shows that DoorDash, Inc. (NASDAQ:DASH) commands a whopping 67% of the food delivery market, which reduces some of the pressure that managements typically face for growth. It also means that margins, customer retention, and customer profitability are the three key drivers of DoorDash, Inc. (NASDAQ:DASH)’s hypothesis. The importance of cost control to its hypothesis was evident after DoorDash, Inc. (NASDAQ:DASH)’s Q1 earnings saw it guide Q2 operating income at a midpoint of $375 million which missed analyst estimates of $394 million. Cantor believes that the firm’s operating margins as a percentage of its gross order value can exceed 6% in fiscal year 2025. It also believes that customer loyalty can help DoorDash, Inc. (NASDAQ:DASH) navigate through demand slowdown in economic downturns.

On the topic of softening demand, here’s what DoorDash, Inc. (NASDAQ:DASH)’s management shared during the Q2 2024 earnings call:

“We’re seeing really strong demand on the consumer side. So, we’re not actually seeing some of the challenges that you may be hearing about or reading about in other headlines. I think there are a few reasons for this. I think, first, we’re still in the early innings of the move towards digital and the overall omnichannel experiences that every restaurant and retailer is participating in and we’re lucky to play in the part that is growing. I mean, if you look at digital only, that’s growing not just for us at DoorDash on our marketplace, it’s also growing for us in our first-party platform as we power a lot of these restaurant and retailer websites for ordering, as well as their delivery channels.

And they see that too, by the way. While some restaurants, to your point, may be seeing some headwinds in traffic, I mean, their digital channels are growing very robustly, many multiples of, I think, their overall growth and we see that similarly. But at the same time, we’re still just single-digit penetration in restaurants and outside of restaurants. We’re even lower than that. So, we see a long runway for growth there. The second point I make is that our product continues to get better. I mean, if you looked at our cohort behavior, whether it’s retention or order frequency, I mean, all of these things are as good or better than even our pandemic cohorts for every cohort since the pandemic. And so, I think that’s a reflection and testament to the work that the team is doing.”