DoorDash
said it has expanded the list of stores from which it delivers groceries, news that came shortly before its competitor Instacart is expected to go public.
DoorDash
(ticker: DASH) is best known as an online delivery service that lets users order meals from local restaurants, but it also provides grocery delivery services. On Monday, it unveiled a list of new grocery partners, adding around 100,000 non-restaurant stores to its MarketPlace and Drive platforms across North America.
“We’ve made significant progress in investing in long-term partnerships with grocers of all sizes, all while remaining focused on improving quality and execution,” Fuad Hannon, vice president of New Verticals at DoorDash, said in a news release.
On Sunday, Mizuho Securities analyst James Lee raised his rating on the stock to Buy from Neutral, increasing his target for the price to $105 from $90. He said he believes the company has the ability to continue gaining market share in food deliveries and that opportunities for growth remain because consumer spending remains resilient and the rate of inflation in food prices is coming down.
Profits from the U.S. food delivery business enable the company to improve its market position by investing in adjacent businesses such as grocery delivery, he wrote.
Shares of DoorDash were 2.7% higher at $83.06 on Monday. The stock has jumped 69% this year.
DoorDash’s announcement came as investors look ahead to the initial public offering of Instacart, which is scheduled for Tuesday. David Trainer, CEO of the investment-research firm New Constructs, said he has concerns about how competition might affect the grocery-delivery company’s performance.
Instacart had no immediate comment.
“It’s true, Instacart has built a profitable business, but growth is slowing, competition is rising, and demand for this service remains shaky as people return to in-person shopping as the pandemic fades,” Trainer wrote Monday.
“Without grocery stores, there is no Instacart,” Trainer said. “Unfortunately for Instacart, its partners are quickly becoming competitors as they build out their own delivery services.”
Walmart
(WMT) offers monthly subscription plans that include deliveries. The latest news from DoorDash adds to the competitive threat.
Write to Angela Palumbo at [email protected]
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