Pershing Square Challenge 2026 winners on DoorDash $DASH

Episode Summary

Executive Summary: Andrew Walker interviews the Columbia MBA winning team from the Pershing Square Challenge on their bullish DoorDash pitch. The team argues the market underestimates U.S. restaurant growth, international and new verticals profitability, and margin expansion from operating leverage and tech integration. They also defend DoorDash’s product quality, management, and resilience against competition and AI-enabled disruption.

Main Topics: Why DoorDash Was Chosen (Priority: 5/5): The team explains that DoorDash was selected because it is easy to understand, has clear risk-reward asymmetry, and allows for deep primary research across users, merchants, competitors, and international expansion. U.S. Restaurants Growth Still Early (Priority: 5/5): Their central thesis is that U.S. restaurant delivery penetration and usage frequency are still expanding, helped by demographic tailwinds, improved product quality, and share gains versus rivals. Valuation and Downside Debate (Priority: 5/5): Walker pushes back on valuation, noting rich EBITDA multiples and heavy stock-based comp and capitalized costs; the team responds with longer-horizon valuation, FCF-based framing, and margin expansion potential. International and New Verticals (Priority: 5/5): The team argues that international acquisitions like Wolt and growth in new verticals such as grocery will become profitable sooner than the market expects, supported by primary research and basket-size data. Management Quality and Operating Discipline (Priority: 4/5): They frame DoorDash as a management-led story centered on Tony Xu’s culture of operational excellence, disciplined capital allocation, and willingness to exit weak markets or invest heavily in infrastructure. Competition and AI Disruption Risks (Priority: 4/5): The discussion covers competition from Uber Eats, Instacart, Amazon, and bundled memberships, plus skepticism around AI agents replacing DoorDash; the team argues the physical-network complexity and three-sided marketplace are durable advantages.

Key Arguments: DoorDash is mispriced because the market underestimates how much room U.S. restaurant delivery still has to grow in active users and order frequency. Demographic shifts add meaningful annual demand: about 4 million people in the U.S. age into adulthood each year, and younger cohorts are more likely to use DoorDash. DoorDash’s product is meaningfully better than peers on delivery speed, fees, merchant selection, and customer satisfaction, which supports share gains. The team models only modest frequency growth, implying their bullish view is not dependent on heroic assumptions. International acquisitions, especially Wolt, are already showing market-share gains and should scale more profitably as integration improves. New verticals like grocery are lower margin than restaurant delivery, but DoorDash can still create value because management is disciplined about payback periods and capital allocation. The tech-stack consolidation across DoorDash, Wolt, and Deliveroo is expensive now but should create future leverage and lower duplication. Competition and AI are real concerns, but the business depends on a hard-to-replicate physical logistics network, not just software. Tony Xu is viewed as central to the investment case because he created a culture of data-driven execution and operational excellence. The stock competition framing favors a clear, researchable, understandable business with visible asymmetry over a complex, niche idea.

Data Points: Primary research calls: 90 - The team said they conducted roughly 90 primary research calls across employees, merchants, investors, and analysts. U.S. people aging into adulthood annually: ~4 million - Used to support the demographic tailwind for DoorDash demand growth. U.S. monthly active user order frequency: ~5 to 6 orders per month - Their model assumes average monthly orders rise from about five to six over several years. Modeled order frequency CAGR: 3% - Expected growth in order frequency per monthly active user. Modeled monthly active user CAGR: 8% - Driven by demographics, share gains, and more low-frequency users becoming monthly actives. Share of MAU growth from demographics: ~45% - The team said about 45% of modeled monthly active user growth comes from demographic trends. DoorDash U.S. restaurant fee take rate: Over 20% of subtotal - Approximate restaurant commission retained by DoorDash on food orders. Grocery commission rate vs restaurant: Less than half of restaurant take rate - Used to explain why grocery needs larger basket sizes to be profitable. Grocery basket sizes: From low-30s to north of 50 - Third-party data suggested average grocery basket sizes rose from the 30s three years ago to above 50. DoorDash market cap: ~$70 billion - Andrew cited this as the company’s approximate market capitalization during valuation discussion. Trailing EBITDA: ~$3 billion - Andrew noted this figure while arguing the stock already looks expensive on EBITDA. Stock-based compensation (2025): ~$1 billion - Raised as part of the GAAP vs adjusted earnings debate. Stock-based compensation (2026): ~$1.3 billion - Used to highlight heavy ongoing equity compensation. LTM CapEx: ~$1 billion - Andrew referenced capital expenditures as part of the true cost base. Capitalized software: ~$1.3 billion - Included in the critique that adjusted earnings may overstate profitability. Target terminal multiple: 10x - The team’s valuation framework used a 10x terminal multiple on future earnings/EBITDA. Implied price target: ~$320 - Their 2029/2030 valuation work led to an approximate $320 price target. Implied free cash flow multiple: ~18x - After adjusting for stock-based compensation, their terminal valuation equates to about 18x FCF. International / new verticals losses: ~$1.5 billion currently - Aaron cited this as current loss level for new verticals while explaining future profitability inflection. Tech integration spend: $300 million to $400 million - Estimated cost to unify DoorDash, Wolt, and Deliveroo onto one tech stack. EBITDA 2027-2028 vs street: 11%-12% below street - Their model is below consensus in the near term because of integration expense. EBITDA 2028-2030 vs street: 16%-17% above street - Their model becomes meaningfully above consensus in later years as leverage emerges. Tony Xu cash salary: $400,000 per year - Discussed in the compensation and alignment discussion. Compensation structure for other executives: ~4% cash / 96% equity - Used to argue management is highly aligned with shareholders.

Pivotal Quotes: "The biggest one, we think, is that the U.S. restaurant growth story is still in the middle innings." — Aaron Samuels: Core thesis statement explaining why the market underestimates DoorDash's main growth engine. "Management is maniacal about everything getting efficient, getting profitable." — Aaron Samuels: Describing DoorDash leadership’s discipline around capital allocation and operational execution. "The barrier to entry isn't actually the software, it's the actual network effects." — Aaron Samuels: Response to AI/agent disruption concerns and a defense of DoorDash's moat.

Implications: The podcast suggests DoorDash remains a durable, underappreciated compounder if user growth, international integration, and operating leverage continue. For investors, the key debate is whether the market is too bearish on long-term profitability and moat strength.