[I own DoorDash stocks. This is not investment advice. Do your own due diligence.]

DoorDash is my largest position. In early November 2021, I completely liquidated my DoorDash holdings (see my earlier post). Since then, I have been accumulating DoorDash stocks, buying aggressively in very recent weeks. My cost basis is less than half of the price that I sold DoorDash last November. As I wrote in my year end summary for 2021 (link), “A low cost basis is the mathematical foundation for achieving a high IRR.” In my investing, I intend to achieve a high IRR. Therefore, a low cost basis matters.

I believe DoorDash’s stock has been in a state of supply/demand imbalance. Since November 2021, active tech investors have been de-grossing their portfolios, creating a large supply of shares on the market to be liquidated quickly. Yet, buyers did not show up in large numbers — so, we saw a weakened demand for DoorDash stock. This supply/demand imbalance resulted in a ~60% slump in DoorDash’s share price — which took place even though DoorDash’s underlying business was doing just fine.

So, why did DoorDash’s stock surge today? Here are a few quick points that I want to highlight.

Food Delivery is here to stay in the U.S. This is a fact. It is obvious. After today’s earnings release, it would make little sense for any investors to remain skeptical of Food Delivery. To quote DoorDash’s Shareholders Letter (2021 Q4), “Demand on our Marketplace grew substantially in 2021, exceeding our expectations and the expectations of many who questioned the sustainability of demand as restaurants reopened.”

DoorDash’s commanding lead over its competitors is growing. On the earnings call, Tony Xu said: “We actually haven’t noticed any [market] share loss in any time period recently in the fourth quarter or for the year of 2021… we continue to be the leading acquirer of all customers that come into the industry for the first time.”

The risk of GOV shrinking has reduced. As of 2021 Q4, DoorDash’s GOV grew by ~7% QoQ and by ~36% YoY — note, this is meaningful growth on the high base of 2020.

DoorDash is a profitable business. I genuinely think it is a mistake to see DoorDash as an unprofitable company. DoorDash does not “show” a GAAP accounting profit, because DoorDash uses profits from its core U.S. food delivery business to fund new growth projects. Tony made this point clear to all the investors: “We have such a robust core business that’s producing positive cash flow, and with a very healthy balance sheet, it gives us lots of opportunities to be opportunistic and go on the offensive.”

I remain very bullish about DoorDash.

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