Key Takeaways
- DoorDash (DASH) stock gained 13% from October 26 to November 2, outperforming the Nasdaq 100 ETF’s roughly 4% decline after record quarterly earnings and a major acquisition announcement.
- Instacart (CART) agreed to be acquired for approximately $17 billion, bringing DoorDash grocery delivery capabilities and a valuable advertising business.
- Uber (UBER) reportedly explored acquiring Instacart, while Consumer Edge data showed DoorDash accounted for 59% of tracked delivery-app spending, compared with 18% for Uber Eats.
- DoorDash’s earnings growth supports the deal, but its cash-heavy financing, regulatory uncertainty, and integration costs make the acquisition’s long-term returns critical.
DoorDash (DASH) stock climbed approximately 13% from October 26 to November 2 after the company reported record third-quarter earnings and announced plans to acquire Instacart (CART) for approximately $17 billion.
The transaction could strengthen DoorDash’s grocery delivery operations while intensifying competition with Uber (UBER), which reportedly held preliminary acquisition discussions with Instacart.
Although DoorDash’s underlying business continues to grow, the acquisition introduces financing and regulatory risks that could affect shareholder returns.
What Happened?
DoorDash reported record third-quarter results on October 29, with marketplace gross order value increasing 36% to $33.9 billion and revenue rising 34% to $4.6 billion.
Excluding Deliveroo, revenue increased 23% year over year, showing that DoorDash’s existing operations continued growing independently of its recent acquisition.
Net income jumped 91% to $466 million, representing diluted earnings of approximately $1.06 per share, compared with analysts’ expectations of $0.81.
The company also announced its agreement to acquire Instacart for $65 per share, representing a 26% premium to Instacart’s October 22 closing price.
At least 75% of the transaction consideration will be paid in cash, while DoorDash stock is capped at 25%.
Instacart generated approximately $3.75 billion in revenue during 2025, including $1.07 billion from advertising and other services, representing roughly 28% of total revenue.
In the acquisition announcement, DoorDash CEO Tony Xu said, “Grocery is one of the hardest things to get right online,” highlighting why Instacart’s established technology and retail relationships could strengthen the combined business.
The competitive implications are significant.
According to Consumer Edge data cited in TIKR’s DoorDash acquisition analysis, DoorDash represented approximately 59% of tracked delivery-app spending in the third quarter, while Instacart and Uber Eats each accounted for 18%.
Together, DoorDash and Instacart represented approximately 77% of spending in that dataset, although this does not represent overall grocery delivery market share.
The combination could create a more formidable competitor for Uber across restaurant and grocery delivery.
The $17 Billion Deal Comes With Regulatory and Financing Risks
Despite its strategic appeal, the Instacart acquisition faces significant regulatory and execution challenges.
DoorDash expects the transaction to close in late 2027 or the first half of 2028, subject to shareholder and regulatory approvals.
Separately, the FTC launched an October 28 inquiry into personalized pricing and compensation practices involving DoorDash, Instacart, and other companies. Although unrelated to the merger review, the inquiry introduces additional regulatory scrutiny.
Financing also deserves attention.
DoorDash arranged a JPMorgan bridge financing facility of up to $13 billion to help support the acquisition, while its September financial statements showed approximately $6.8 billion in cash and investments.
The cash-heavy transaction could leave DoorDash with more debt than cash after closing, increasing financing costs and reducing financial flexibility as the company continues expanding.
Management also expects to reinvest more than 100% of anticipated acquisition synergies during the first year after closing.
That strategy could support integration and long-term growth, but investors should not assume the acquisition will immediately boost earnings.
Is DoorDash Stock Undervalued or Overvalued?
DoorDash appears reasonably valued based on its projected earnings growth, although the proposed Instacart acquisition introduces financing and execution risks that could limit near-term upside.
According to TIKR data as of October 30, analysts expected normalized earnings per share to increase from $5.81 in 2026 to $8.02 in 2027 and $9.91 in 2028.
These forecasts do not yet fully incorporate the proposed Instacart acquisition, making its eventual contribution to earnings an important factor to monitor.
DoorDash traded at approximately 26x forward earnings as of October 30, below its 39x three-year historical average. While the lower multiple suggests a less demanding valuation, investors must also consider the acquisition’s financing costs, integration risks, and potential impact on future earnings.
Wall Street’s $251 consensus price target implied roughly 32% upside from the November 2 closing price of $190.07, based on the original reporting snapshot.
The $17 billion Instacart deal looks strategically attractive for DoorDash, but it is too early to call it a financial success. The acquisition could strengthen its grocery delivery and advertising businesses, although regulatory approval, financing costs, and integration risks remain significant.
For investors, DoorDash’s existing earnings growth offers a stronger foundation for long-term upside than the uncertain returns from the proposed acquisition.
So what is DoorDash stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
