DoorDash puts profit on the menu

A delivery person for Doordash rides his bike in the rain during the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., November 13, 2020.

NEW YORK, Nov 30 (Reuters Breakingviews) - DoorDash (DASH.N) is taking the same route as its technological peers. The $22 billion food delivery company unveiled plans on Wednesday to slash its workforce by 6%, or about 1,250 people, in what has become a familiar refrain from Silicon Valley. Following boss Tony Xu’s blog post about the decision, the shares jumped 4%, recovering a morsel of the 75% decline from their November 2021 peak.

Top-line growth, which has been the main course at DoorDash and elsewhere, will be relegated to a side dish. The nearly $5 billion in revenue it generated in the first nine months this year, represents an eightfold increase from the same period in 2019. Costs also ballooned, however, and DoorDash accumulated a $3.2 billion deficit from operating losses as of Sept. 30. Even if revenue stayed flat, if it managed to halve its combined $1.4 billion in general and administrative and research and development costs through Sept. 30, the company would swing to a notable operating, and perhaps net, profit.

DoorDash has outpaced rival Uber Technologies (UBER.N), growing its U.S. market share to roughly 60%, per consumer data analyst Bloomberg Second Measure. The strong position should help Xu tweak the menu and serve up what investors are ordering. (By Jennifer Saba)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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