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DoorDash (DASH +6%) looks pretty dashing today: shares of the online food delivery platform are posting solid gains, extending an upward trend that has supported the stock since mid-May. The advance has taken place through a period that initially looked like it could present challenges for DASH. Faced with potential impact to its business from the fuller re-opening of restaurants, which coincided with summer's seasonal slowness, and margin pressure from certain planned investments, the stock seemed like it could be in for a rough ride this summer, but ultimately, it performed well.

• The catalyst today is an upgrade from BofA to Buy from Neutral, as the firm thinks there is upside to 2021 estimates. We see this upgrade as an encouraging signal of a better chance at upside to consensus as Q3 wraps up in a couple of weeks. Perhaps this summer was better than expected.
• An upside quarter would be welcome relief for investors following two EPS misses in a row. DASH made its IPO debut less than a year ago, in December 2020. Typically, one expects a company to hit the ground running with strong results for the first few quarters after an IPO debut. DASH did not do so. The good news is that revenue keeps ripping higher and has been well above consensus in all three of DASH's quarters as a public company.
• That dynamic of strong revenue growth paired with weak profits is not entirely surprising given the highly competitive nature of the food delivery space, where there is a lot of price competition. That pressure is expected to play out again in Q3. DASH does not guide for EPS, but it does guide for adjusted EBITDA. In August, DASH guided to a sequential decline in adjusted EBITDA at $0-100 mln in Q3, down from $113 mln in Q2.
• Right now, it's clear that DASH is focusing more on growing its business than securing profitability. DASH plans to invest "aggressively" in international growth in 2H21. Late in Q2, DASH launched in Japan, its third international market. DASH also plans to spend money growing its non-restaurant categories (convenience, grocery, alcohol, pets, and flowers and gifts). These investments will eat into EBITDA.

Bottom line, there remains a decent chance that DASH could miss on EPS again in Q3, but it may not matter, as the focus will likely be on revenue growth. With that said, investors should understand that the pace of consumer acquisition usually slows in Q3 because consumers tend to go out to eat more during summer months. However, the Delta variant may have mitigated that impact to some degree this year. Finally, the stock has roughly doubled from its mid-May lows. We think excitement is growing that DASH could have avoided the summer swoon this year.