We recently compiled a list of the 10 Best TaaS Stocks to Invest in According to Hedge Funds. In this article, we are going to take a look at where DoorDash, Inc. (NASDAQ:DASH) stands against the other TaaS stocks.
Market experts opine that the transportation world is surrounded by tech-infused transformation, which creates significant opportunities for investors to go long on TaaS (transportation-as-a-service) stocks. The digital transformation that is being experienced by the transportation sector continues to make delivery services more accessible and customized.
As per Introspective Market Research, factors including the need for on-demand, affordable, and eco-friendly transport solutions are expected to drive the growth of the transportation-as-a-service market.
Technological advancements including self-driving cars are some of the prominent factors, with healthy improvement in connectivity. Smart cities and the application of loT, primarily in the transportation sector, should also act as contributing factors.
How Technological Advancements Will Drive Growth of the TaaS Market?
The TaaS market saw a transformative shift over the recent past, courtesy of the integration of Artificial Intelligence (Al) and Machine Learning (ML). Al-powered systems tend to optimize fleet operations by analyzing real-time and historical data, predicting vehicle demand, and suggesting efficient routes. ML algorithms focus on analyzing user behavior, preferences, and travel history to offer recommendations. Therefore, both the technologies, Al and ML, have transformed demand forecasting and predictive analytics.
As per Successive Digital, deep learning models, mainly Recurrent Neural Networks (RNNs) and Long Short-Term Memory (LSTM) networks, are proficient enough to capture temporal dependencies in data, which helps in demand forecasting. Notably, ML models like ARIMA (Autoregressive Integrated Moving Average) and Prophet are used to predict future demand by studying time-series data.
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Key Trends to Watch Out in 2025
One of the most important trends likely to drive the growth of the TaaS market in 2025 is the rapid adoption of EVs. The global push towards sustainability continues to support the growth of the EV market. Introspective Market Research believes that stringent emission standards set by governments and incentives provided for EVs continue to support the adoption. Furthermore, the development of battery systems focused on enhancing the driving range and cutting down the cost of EVs should make them affordable to consumers.
Next, Mobility as a Service (MaaS) integration should continue to fuel growth in the TaaS market. MaaS platforms focus on the convenience of users by offering a one-stop app where people can locate modes of transport such as buses, trains, bicycles, ride-hailing, etc. As per Introspective Market Research, the evolution of digital technologies like real-time data and analytics, mobile applications, and loT supported the growth of MaaS. These technologies focus on integrating and managing different forms of transport services.
Our Methodology
To list the 10 Best TaaS Stocks to Invest in According to Hedge Funds, we conducted extensive research and scanned through several online rankings. After getting an initial list of 25-30 stocks, we filtered out the ones having high hedge fund holdings. Finally, the shortlisted ones were ranked in ascending order of their hedge fund sentiment, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A shot of a delivery driver zooming down a busy street, symbolizing the company’s quick and efficient delivery services.
DoorDash, Inc. (NASDAQ:DASH)
Number of Hedge Fund Holders: 73
DoorDash, Inc. (NASDAQ:DASH) is a food delivery and logistics platform that connects customers with local restaurants, grocery stores, and other businesses. The company connects consumers with local restaurants and delivery personnel through its digital marketplace. The company’s business model allows consumers to order food from a wide selection of restaurants via the DoorDash app or website, with deliveries fulfilled by Dashers (delivery drivers) using their personal vehicles.
The company generates revenue from commissions charged to merchants, delivery fees, advertising and promotions, logistics-as-a-service, etc. Moving forward, DoorDash, Inc. (NASDAQ:DASH) plans to deliver food and almost everything such as alcohol, beauty products, and sports goods, among others. This will help expand its total addressable market, which remains critical for long-term growth and should drive revenue growth substantially. As per Wall Street analysts, as and when its non-food categories gain traction and the transformation matures, DoorDash, Inc. (NASDAQ:DASH) should be able to improve its margins.
As per Fortune Business Insights, the US foodservice market size was valued at US$824.61 billion in 2022 and should grow from US$905.13 billion in 2023 to US$1,767.54 billion by 2030, demonstrating a largely untapped opportunity. DoorDash, Inc. (NASDAQ:DASH)’s strong user engagement indicates a potential for continued growth through increased penetration and order volume.
Apart from the growth prospects of the US food service market, the company should benefit from international expansion. The recent acquisition of Wolt has provided DoorDash, Inc. (NASDAQ:DASH) with a foothold in international markets, offering significant growth potential. Wolt is known for its user-friendly app and advanced logistics technology. DoorDash, Inc. (NASDAQ:DASH) can leverage this technology to optimize its operations, improve delivery efficiency, and enhance the customer experience.
TimesSquare Capital Management, an equity investment management company, released its third-quarter investor letter. Here is what the fund said:
“Our preferences in the Consumer-oriented sectors lean toward value-oriented or specialty retailers, franchise models, or premium brands. DoorDash, Inc. (NASDAQ:DASH), an online food delivery platform and logistics provider, climbed 31%. We had begun building our initial position in DoorDash in May-June timeframe and ramped up the position size prior to the second quarter earnings report that was released in August. DoorDash delivered broad-based positive results versus street expectations.”
Overall DASH ranks 2nd on our list of the best TaaS stocks to invest in according to hedge funds. While we acknowledge the potential of DASH as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than DASH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.