Your Dasher is on the way with your burrito, and is bringing along some news, too: Food delivery services are going global.
DoorDash announced today it was making not one, but two massive acquisitions in order to simultaneously expand its reach into over 40 countries and up its tech game. It plans to purchase the London-based delivery platform Deliveroo for about $3.9 billion, and is also buying hospitality software company SevenRooms for $1.2 billion.
The news should be good for shareholders: DoorDash and Deliveroo have roughly 50 million monthly active users combined, while SevenRooms’ restaurant reservation platform could give DoorDash insight into customer trends and habits.
Yet DoorDash stock sank 7.44% today, after the company announced it missed revenue expectations for its first quarter.
Zoom out: These deals are happening amid an M&A drought. In fact, the number of M&A deals across the world fell to their lowest level in 20 years in April, Reuters reported. Companies and bankers alike are skittish given the ongoing questions about how President Trump’s tariffs could shape the global finance landscape.
But analysts have noted that despite the wider downturn, the food delivery service industry is well-positioned for further consolidation because it can be tough for smaller players to grow, especially amid inflation and a consumer downturn. That’s why appetizing apps around the globe have been quietly merging while the rest of the M&A market lags: Dutch tech firm Prosus NV purchased Amsterdam-based Just Eat Takeaway for about $4.3 billion in February, while Wonder Group acquired Grubhub for $650 million in January.
Oh, and by the way: Earlier today Uber announced it’s acquiring an 85% stake in Turkish food delivery platform Turkiye GO in a deal worth roughly $700 million.
Should investors order DoorDash?
Besides missing revenue forecasts, would-be investors should be aware that there’s a complication for DoorDash: Amazon has been 16% stakeholder in Deliveroo since 2020. Since then, Amazon hasn’t seen any profits from the deal, so the tech firm now has to decide whether it cuts its losses or makes a counteroffer.
That being said, analysts are still largely bullish on DoorDash. The consensus rating among analysts who cover it is “overweight” according to the Wall Street Journal.
And they’re even more positive about Uber, for that matter: The consensus rating is an overwhelming “buy” rating.—LB
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