![]() The idea is that each incremental transaction adds to your contribution profit and moves you closer to overall profitability. For unprofitable businesses like DoorDash, you want to see contribution profit rising so it can overcome its fixed expenses and turn a profit. Contribution profit refers to what's left after accounting for the variable cost of revenue per transaction. Businesses have fixed and variable costs. That said, I think there's a case to be made for buying DoorDash stock if you understand contribution margin. Therefore, this isn't an issue that's likely to lessen. This is roughly the same pace it's paid out this compensation in 2022. Over the next three years, DoorDash could pay another $2.8 billion in stock-based compensation, according to filings with the Securities and Exchange Commission (SEC). The company has paid $609 million in stock-based compensation through the first nine months of 2022 - and that needs to be accounted for on the income side of the equation. However, it's still a real expense for shareholders. Shares of DoorDash aren't cash money, so they don't affect operating cash flow. The disparity between operating cash flow and operating income is entirely explained by stock-based compensation. But operating income is negative and deteriorating.ĭASH Cash from Operations (TTM) data by YCharts Some investors might contend that the company has positive cash from operations, which is true. However, DoorDash's rise to prominence didn't result in attractive cash flows, and that's my top reason to consider selling this stock.
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