Proprietary Data Insights
Top Software Application Stock Searches This Month
Conspicuous in Its Absence
Over the last month or so, we’ve written about Uber (UBER) twice.
But there’s another stock – beaten down twice as hard as Uber has been so far this year – we like almost as much as we like the original rideshare company.
Unlike Uber, this stock, for one reason or another, flies under the radar in our proprietary sentiment indicator, Trackstar. In fact, it doesn’t even show up in the list of the most searched software application stocks. We’ll get to it in a second, but first an update on Uber.
We first expressed bullishness on Uber when it announced it would sell weed in Canada. We likened Uber to Amazon, but said it needs to take its everything-for-everybody strategy further:
Open the Uber app.
It looks a lot like Amazon (AMZN)’s platform in terms of offering many services (standard rides, hiring drivers by the hour, food, scooters, package delivery, groceries, car rentals, and, if you live in Toronto, cannabis delivery) and its Amazon Prime-like monthly subscription, Uber One…
Beyond that, Uber needs to do a better job becoming part of your daily life in multiple areas. Just like Amazon’s done via Prime membership.
Specifically, Uber needs to capture the rider’s imagination and effectively occupy their idle time in the backseat. Every one of us is glued to our phone screen when sitting in an Uber.
Lo and behold, we were onto something. Just days later, Uber announced an expansion into targeted, personalized advertising. We wrote about it in The Juice:
When you’re Ubering (like Google, Uber has become a noun and verb, another great sign), Uber can put relevant ads in front of you because, unlike DISH [Dish Network] and taxis, Uber knows so much about you from demographics, trips, Uber Eats orders, and other data you constantly feed its servers.
A little late to the party, but meaningful nevertheless, a couple weeks ago influential tech blog TechCrunch published an article called “The Amazonification of Uber.”
TechCrunch essentially mimicked the points we made, but added something interesting:
The company recently launched a new advertising division that oversees in-app ads during rides. To grow that business out, we might one day see Uber hiring creatives and using its vast amounts of data on riders to provide external marketing services for brands. Who knows?
We like the way tech nerds think.
As investors, we think the company that’s conspicuous in its Trackstar absence could, one day, be a buyout candidate for none other than Uber.
The Next Amazon? 2 Speculative Stocks to Buy Now
As we noted last week about Facebook and Instagram parent Meta Platforms (META), sometimes a lack of investor interest signals opportunity. There’s nothing better than getting into a stock – especially a beaten-down one – before it regains favor with investors.
And interest in DoorDash (DASH) fell 35% over the last week, according to Trackstar, knocking it off of the list of the most searched software application stocks.
Even worse, the stock has cratered roughly 63% year to date, nearly twice as much as Uber’s fall.
But over the last month, DASH has sprinted ahead of UBER, returning approximately 21%.
Source: Google Finance
Yes, DoorDash loses money. Just like Uber. Just like Amazon used to.
At this stage of the company’s growth, we’re not concerned with profits as much as we are growing revenue, growing scale, and a growing ecosystem.
Like Uber today and the Amazon of yesterday and today, DoorDash has all three:
DashPass provides free delivery, reduces fees on some orders (a big selling point with many users), and gives 5% cash back if you pick up an order.
DoorDash says DashPass is the biggest paid membership program in the food space. It increases customer retention and order frequency. And the company has no plans to raise the normal price, as DashPass is central to its growth strategy.
If you’ve ever used DashPass, you know it’s worth it. It makes DoorDash your go-to app for delivery. Of takeout and, increasingly, other items, such as groceries and booze. Don’t be shocked to see DoorDash add weed to the menu, as much of the company’s in-app advertising appeals to the stoner with the munchies looking for something scrumptious to eat.
The Bottom Line: We’re completely sober when we say this, but we expect consolidation in the broad delivery and all-things app space. If not consolidation, at least partnership.
As DoorDash builds out DashPass and enters new spaces, Uber is doing likewise via Uber One (its monthly subscription program) and Uber Eats. If it isn’t already, DoorDash’s list of monthly and yearly paying members will look attractive to Uber.
But even if that doesn’t happen, DoorDash is following the Amazon and Uber playbook. Building out an impressive ecosystem to keep consumers loyal. They’re doing what TechCrunch said about Uber in that article we liked: “creat(ing) a closed business loop with each product feeding customers back into other [of its] channels. And that loop is growing.”
Bingo. We like the idea of buying a little bit of DASH, alongside UBER, at regular intervals in the speculative part of your long-term portfolio.
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