Becker Private Equity & Business Podcast: The DoorDash Death Spiral

Host: Scott Becker
Episode Title: The DoorDash Death Spiral
Release Date: May 6, 2025
Podcast Description: Discussions about private equity and business with Scott Becker

Introduction

In the May 6, 2025 episode of the Becker Private Equity & Business Podcast, host Scott Becker delves into the precarious situation surrounding DoorDash, a leading food delivery service. Titled "The DoorDash Death Spiral," Becker explores the factors contributing to DoorDash's declining organic growth and its reliance on significant acquisitions to sustain revenue.

DoorDash's Current Financial Performance

Becker opens the discussion by addressing DoorDash's recent stock performance:

"The stock is down about 8-9% today. It's still up about 12% year to date, or at least it shows that on the books today."
— Scott Becker [02:15]

Despite a year-to-date increase, DoorDash exhibits volatility, signaling investor unease.

Acquisitions as a Growth Strategy

A central theme of the episode is DoorDash's strategy to counteract stagnant organic growth through major acquisitions:

"DoorDash is in that horrendous situation that we find companies in sometimes where their organic growth is slowed to almost zero and then it has to find revenue through big-ticket acquisitions."
— Scott Becker [04:30]

Becker highlights two significant acquisitions:

1. Deliveroo: Acquired for approximately $3.9 billion, Deliveroo is a UK-based delivery service, expanding DoorDash's international footprint.

2. Seven Stores: Although Becker admits limited knowledge about this company, he acknowledges it as another player in the delivery sector.

Concerns Over Reliance on Acquisitions

Becker expresses deep concerns about DoorDash's heavy reliance on acquisitions to fuel growth:

"What I absolutely hate in watching companies is when the organic growth is totally stalled and they make it up through acquisitions. It's almost the old adage of losing money and everything."
— Scott Becker [06:45]

He fears that this strategy may lead to a "death spiral," where continued acquisitions become unsustainable, potentially eroding shareholder value.

Comparison with Palantir

Contrasting DoorDash's approach, Becker references Palantir as a more stable investment:

"I'd rather hold on to the price tag of Palantir, which is dropping today itself, which is still showing tremendous growth and not having to make it up on volume or through acquisitions."
— Scott Becker [08:20]

He praises Palantir for maintaining growth without the need for aggressive acquisitions, positioning it as a preferable alternative for investors.

Investor Sentiment and Market Implications

Becker discusses the broader implications of DoorDash's strategy on investor confidence:

"Making it up through volume always gives me great concern as an investor, as a watcher and so forth."
— Scott Becker [09:50]

He underscores that reliance on volume and acquisitions can undermine long-term sustainability and market trust.

Conclusion

Wrapping up the episode, Becker reiterates his apprehensions regarding DoorDash's trajectory:

"The doordash death spiral."
— Scott Becker [12:10]

He urges listeners to monitor DoorDash's strategic decisions closely, emphasizing the potential risks associated with its current growth model.

Key Takeaways

• DoorDash's Stock Volatility: Despite a year-to-date gain, recent stock dips indicate underlying issues.

• Aggressive Acquisitions: DoorDash's purchase of Deliveroo and Seven Stores signal a shift from organic growth to expansion through acquisitions.

• Investor Concerns: Heavy reliance on acquisitions raises red flags about the company's long-term sustainability.

• Palantir as a Benchmark: Contrasting DoorDash, Palantir exemplifies growth without excessive acquisitions, offering a more stable investment profile.

• Sustainability of Growth Strategies: The episode highlights the importance of balancing growth methods to ensure enduring business health.

Notable Quotes

• "The stock is down about 8-9% today. It's still up about 12% year to date, or at least it shows that on the books today."
  — Scott Becker [02:15]

• "DoorDash is in that horrendous situation that we find companies in sometimes where their organic growth is slowed to almost zero and then it has to find revenue through big-ticket acquisitions."
  — Scott Becker [04:30]

• "What I absolutely hate in watching companies is when the organic growth is totally stalled and they make it up through acquisitions. It's almost the old adage of losing money and everything."
  — Scott Becker [06:45]

• "I'd rather hold on to the price tag of Palantir, which is dropping today itself, which is still showing tremendous growth and not having to make it up on volume or through acquisitions."
  — Scott Becker [08:20]

• "Making it up through volume always gives me great concern as an investor, as a watcher and so forth."
  — Scott Becker [09:50]

• "The doordash death spiral."
  — Scott Becker [12:10]

Final Thoughts

Scott Becker provides a critical analysis of DoorDash's current strategies, emphasizing the dangers of over-reliance on acquisitions when organic growth stalls. By contrasting with companies like Palantir, he offers listeners a framework to evaluate investment opportunities in the tech and delivery sectors. This episode serves as a cautionary tale for investors and business enthusiasts alike, underlining the importance of sustainable growth practices.

Thank you for tuning into the Becker Private Equity and Business Podcast. Stay informed and make savvy investment decisions!