DoorDash (DASH) is in focus on Monday, March 10 following news the online food ordering and delivery company is set to become a part of the benchmark S&P 500 Index ($SPX) on March 24.
A U.S.-based company is eligible for inclusion in the S&P 500 only if it has reported positive earnings in its latest reported quarter as well as cumulatively over the past four quarters.
DoorDash met these and a bunch of other criteria to find itself a spot in the benchmark index. Its stock has rallied nearly 70% since late July, but the S&P 500 inclusion may help unlock significant further upside in it in 2025.
How to Play DoorDash Stock Ahead of S&P 500 Inclusion
U.S. stocks tend to lose more than 1% in the week following their S&P 500 inclusion, according to Barclays analyst Benjamin Budish.
However, in the build up to their inclusion, they often gain as much as 7%, a historical pattern that makes DoorDash stock worth owning at current levels, Budish argued in a recent research note.
Plus, if the food delivery company were to pull back following its inclusion in the S&P 500 on March 24 as Budish is projecting, it may only create another buying opportunity, given the strength of its financials.
In February, DoorDash reported $2.87 billion in revenue for its fiscal fourth quarter versus the analyst estimate of $2.84 billion.
DoorDash Financials Warrant an Investment at Current Levels
DoorDash stock remains an exciting investment for 2025 also because management sees continued momentum in Q1.
CFO Ravi Inukonda guided for $22.8 billion in gross order value last month compared to the $22.4 billion that experts had forecast.
On Monday, analysts at the Bank of America also agreed that S&P 500 inclusion could prove to be a meaningful catalyst for DoorDash shares.
They reiterated their “Buy” rating on the San Francisco-headquartered firm today and said its stock could hit $245 by the end of this year, indicating potential upside of more than 40% from here.
Wall Street Sees Further Upside Ahead in DoorDash Shares
Investors should note that Wall Street at large is bullish on DoorDash shares ahead of their inclusion in the S&P 500 Index.
The consensus rating currently sits at “Moderate Buy” with a mean target of $222 that translates to potential upside of nearly 30% from current levels.
