Top Midday Stories: DoorDash to Acquire SevenRooms, Deliveroo; Palantir Shares Fall Despite Solid Q1

The market is buzzing with two major developments: DoorDash’s bold acquisition strategy and Palantir’s post-earnings selloff. Both stories highlight divergent investor sentiment toward growth stocks—one betting big on expansion, the other grappling with valuation skepticism.

DoorDash’s Global Ambition: Paying for Growth or Overextending?

DoorDash announced two significant acquisitions this morning: a £2.9 billion ($3.9 billion) buyout of Deliveroo, the U.K.’s leading food delivery platform, and a $1.2 billion all-cash deal for SevenRooms, a hospitality tech firm. These moves aim to transform DoorDash into a global local commerce powerhouse, but investors are skeptical.

Why the Acquisitions Make Strategic Sense

• Deliveroo: With operations in over 40 countries, Deliveroo gives DoorDash a foothold in Europe and Asia. Combined, the two companies reported a $90 billion gross order value (GOV) in 2024 and 50 million monthly active users.
• SevenRooms: This acquisition targets non-food verticals, such as hotels and grocery stores, by integrating SevenRooms’ customer relationship tools. DoorDash hopes to boost merchant services and diversify beyond food delivery.

The Financial Risks

• DoorDash’s Q1 2025 results showed $3.03 billion in revenue (21% YoY growth), but adjusted EBITDA guidance fell short of expectations. Investors worry that the $5.1 billion in total acquisition costs could strain margins.
• The stock dropped 9.8% to $185.35 on the news, reflecting concerns over integration challenges and the high price tag.

What’s Driving the Optimism?

• Grocery delivery is booming: DoorDash’s Q1 GOV hit a record $23.1 billion, with grocery sales surging 20% YoY.
• Membership programs like DashPass are reducing churn, with adoption rates climbing.

Verdict: The acquisitions are a bet on long-term dominance, but execution will be critical.

Palantir’s Valuation Crossroads: Growth vs. Overvaluation

Palantir Technologies reported stellar Q1 2025 results, with 39% YoY revenue growth ($884 million) and raised its full-year guidance. Yet its shares fell 12% post-earnings—a stark reminder that valuation matters more than growth alone.

The Numbers Look Strong…

• Commercial revenue jumped 71% to $255 million, fueled by deals with firms like Citi and BP.
• Government revenue rose 45% to $373 million, including a $178 million U.S. Army contract for AI-powered military logistics.
• Free cash flow surged 149% to $370 million, and the company now sees $1.8 billion in annual free cash flow by year-end.

…But the Market Isn’t Buying

• International struggles: European commercial revenue dropped 5% YoY to $142 million, as the region lags in AI adoption. CEO Alex Karp quipped, “Europe doesn’t get AI yet.”
• Valuation concerns: Palantir trades at 238x forward earnings and 56x projected 2026 revenue. Analysts call this “irrational,” with some noting it’s 6x more expensive than the S&P 500’s average P/E ratio.
• Technical overhang: The stock had climbed 64% year-to-date before the selloff, hitting overbought levels on technical indicators.

The Silver Linings

• Palantir’s $1.1 billion in liquidity provides a buffer for acquisitions or downturns.
• Its role in the U.S. government’s AI push—including ties to Elon Musk’s Department of Government Efficiency—could sustain demand.

Verdict: Palantir’s fundamentals are solid, but its sky-high valuation requires near-perfect execution to justify.

Conclusion: Growth Stocks at a Crossroads

DoorDash and Palantir represent two sides of the growth-stock coin:

1. DoorDash’s acquisitions are a high-risk, high-reward play. The $5.1 billion in deals could pay off if the company successfully integrates Deliveroo’s global network and SevenRooms’ hospitality tech. Investors should monitor Q2 2025 EBITDA guidance and Deliveroo shareholder approval (required by October).

2. Palantir’s valuation dilemma is more immediate. While its AI-driven enterprise software is in demand, the stock’s 12% drop shows that even 39% revenue growth can’t outrun skepticism about its 238x P/E multiple. A retreat below $97 (the 50-day moving average) would signal broader concerns.

Both companies are betting on their ability to scale and innovate in fast-moving markets. For now, DoorDash’s gamble on expansion faces investor scrutiny, while Palantir’s growth is priced for perfection.

Investors should weigh DoorDash’s growth ambitions against its valuation risks, and Palantir’s fundamentals against its overextended stock price. Neither story is cut-and-dried—both require patience and a long-term lens.