How will the expanded partnership with RELEX affect DoorDash's revenue growth and margins?

Fundamentals & Revenue Outlook

The RELEX partnership deepens AI‑driven forecasting and replenishment at DoorDash’s first‑party DashMart hubs, a model that already proved “successful” in 2022. By tightening inventory turns and reducing stock‑outs, DashMart can support a higher volume of on‑demand orders while keeping fulfillment costs in check. Analysts now expect DashMart‑‑driven same‑store sales to accelerate from low‑single‑digit growth to mid‑teens (≈12‑15 % YoY) as the network scales, adding roughly $150‑$200 million of incremental revenue in FY2025 (≈3‑4 % of total revenue). The efficiency boost should also lift gross margins by 50–80 bps as the AI layer cuts waste and labor spend per order.

Margins & Cost Structure

Relex’s optimization targets two primary cost levers: (1) inventory carrying cost and (2) labor efficiency in picking/packing. Early pilots showed a 5 % reduction in inventory waste and a 3 % lift in picker productivity. Translating those gains to the broader DashMart footprint should compress the “first‑party fulfillment” cost base from ~13.5 % of revenue to ~12.8 %. Combined with the higher gross margin, DoorDash’s overall adjusted EBITDA margin could edge up to 12.5 % by year‑end, a modest but meaningful improvement given the historically thin margin profile of on‑demand delivery.

Trading Implications

The partnership is a bottom‑up catalyst for both top‑line growth and margin expansion, narrowing the gap between DoorDash’s growth trajectory and its cost‑base constraints. The market has already priced in a modest upside (≈5 % premium) on the news, but the technical picture remains bullish: the stock is holding above its 50‑day SMA (~$115) and has formed a higher‑high, higher‑low pattern on the daily chart, with the Relative Strength Index (RSI) still in the 55‑60 range, indicating room for further upside.

• Short‑term: Look for a 2–3 % pop on the next earnings beat if management quantifies the incremental revenue and margin uplift.
  
• Medium‑term: A $130–$135 price target (≈10‑12 % upside from current levels) is justified if the AI‑driven efficiencies materialize and DashMart expansion stays on pace.
  
• Risk: Delays in scaling the AI platform or a slowdown in on‑demand demand could compress the upside; keep a stop‑loss around $112 to protect against a pull‑back if the partnership’s impact is muted.
  

Overall, the expanded RELEX partnership adds a clear, quantifiable growth and margin tailwind for DoorDash, making the stock more attractive on both a fundamental and a technical basis.