DoorDash fundamentals are improving but the positive trend may not last

Consumers have remained surprisingly resilient this year. Despite multi-decade high interest rates and economic uncertainty, they continue to spend on products and services. This trend has helped consumer-facing businesses like DoorDash ($DASH) deliver solid results this year.

DASH's revenues grew faster than expected in the most recent quarter, and profitability improved. Once a deeply unprofitable private company, DASH is making good progress toward breakeven, while its cash flows are also increasing nicely. This encouraging financial performance, as well as this year's market rebound, has helped DASH stock rise 64% YTD.

However, the solid financial performance may not last due to the numerous challenges the company faces. The stiff competition is the main reason to be cautious about the company’s long-term prospects. As a gig economy platform with little competitive advantage over other platforms, the increasing competition may hurt the company and prevent it from significantly improving its underlying fundamentals. Let’s take a deeper dive.

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