DoorDash Dives 3%—What's Holding Back the Delivery Giant?

• DoorDash (DASH) slumps 2.9% to $235.81 amid a Jefferies downgrade, trading at a 120% premium to its sector.
• Analysts flag valuation risks as EBITDA growth faces headwinds from affordability initiatives and maturing core business.
• Sector peer Uber (UBER) also dips 1.8%, but DoorDash’s struggles stem from internal execution concerns, not broader sector trends.

Today’s selloff caps a volatile session, with shares oscillating between $234.60 and $239.40—a $5 range underscoring investor uncertainty ahead of Q2 earnings.

Jefferies Downgrade Sparks Valuation Concerns
DoorDash’s 2.9% decline traces directly to Jefferies’ downgrade to ‘Hold,’ which highlighted overvaluation risks. Analysts argue the stock already prices in strong execution, with DoorDash trading at 29x 2026 EBITDA—a premium even as take-rate growth slows to 8 basis points. While Jefferies raised its price target to $250, the firm emphasized that non-core ventures like Deliveroo and grocery delivery require ‘optimistic multiples’ to justify further upside. This skepticism outweighed Q1 EBITDA growth and strategic wins like Aldi partnerships, triggering profit-taking ahead of August’s earnings report.

Internet Retail Sector Mixed as DoorDash Struggles
While DoorDash’s slump reflects company-specific risks, broader internet retail faces crosscurrents. Sector leader Uber’s 1.8% drop hints at delivery market saturation, but peers like Chewy and Instacart face their own challenges. DoorDash’s premium valuation versus peers—129x dynamic PE—contrasts with more muted multiples for delivery competitors, underscoring its reliance on high-growth assumptions. The sector’s 0.44% turnover rate also signals muted institutional interest, with DoorDash’s trade volume at 1.5 million shares lagging its $102B market cap.

Bearish Bias Dominates with Strategic Options Picks
DASH20250718C235 and DASH20250725C235 emerge as top picks for short-term traders:
• Technical Indicators: 200-day MA: $185.59 (far below); RSI: 59.94 (neutral); Bollinger Bands: Current price near middle band ($235.02).
• Setup: Resistance at $239.40 (intraday high) and $248.74 (52W high) remains intact. Support at $230 (July low) and $220 (30D support) could cap losses. The ProShares UltraShort S&P 500 (SDS) offers sector beta hedging.

Bullish call DASH20250718C235 (strike $235) offers 62.96% leverage with delta 0.61, gamma 0.056, and theta -1.89. Its implied volatility (27.72%) aligns with near-term uncertainty, with a 5% downside scenario yielding a $0.35 payoff. Meanwhile, DASH20250725C235 (strike $235) trades at 38.31% leverage, delta 0.57, gamma 0.031, and theta -0.75—ideal for a rebound to $240.

Bearish traders should target DASH20250725P220 (strike $220) with delta -0.12, theta -0.02, and 236.75% leverage, but liquidity constraints (volume=6) pose risks. The hook: “Sell the bounce above $240—DASH20250718C235’s gamma exposure makes it a volatility magnet.”

Backtest Doordash Stock Performance
The DASH ETF has historically shown resilience after experiencing a significant intraday plunge of at least -3%. The backtest data reveals that such events have occurred 198 times over the past five years, with a 3-day win rate of 52.53%, a 10-day win rate of 54.55%, and a 30-day win rate of 50.51%. This indicates that the ETF tends to rebound moderately in the short term following a sharp decline.

DoorDash’s Crossroads: Valuation vs. Execution
DoorDash’s pullback underscores the precarious balance between growth ambitions and valuation reality. While partnerships like Aldi and Starbucks provide long-term leverage, Jefferies’ skepticism highlights the need for EBITDA upside beyond current multiples. Investors should watch Q2 results (Aug 6) for margin trends and take-rate stability. With Uber (UBER, -1.8%) also under pressure, sector-wide concerns about delivery economics loom. For now, the $230 support level and July 18 options expiration offer critical tests. Action Alert: Fade rallies above $240—this is a valuation reckoning, not a structural collapse.