DoorDash (DASH.US), the largest U.S. food delivery platform, reported better-than-expected revenue and order volume for Q3. However, its shares plummeted in after-hours trading due to weaker-than-anticipated profits driven by rising operational costs and investor caution over its aggressive spending plans.

For the quarter ending September 30, DoorDash’s gross order value surged 25% year-over-year to $25 billion, surpassing analysts’ average estimate of $24.6 billion. This marked the strongest growth since mid-2023, attributed to "robust growth" in monthly active users. The company has expanded to over 40 countries globally through its Wolt operations and the recent acquisition of Deliveroo. Revenue rose 27% to $3.45 billion, also beating the $3.36 billion consensus.

However, total costs and expenses jumped 23% year-over-year to $3.19 billion. While net income improved significantly to $244 million ($0.55 per share) from $162 million ($0.38 per share) a year earlier, earnings per share fell short of the $0.69 market expectation.

In a statement, DoorDash revealed plans to invest "hundreds of millions more" in new products by 2026, alongside upgrades to internal platforms to enhance operational stability and development speed, including AI tools for developer productivity.

"DoorDash’s heavy spending plan is a high-stakes gamble but could yield substantial returns," noted eMarketer analyst Zak Stambor. Shares tumbled nearly 20% post-earnings, despite a 42% year-to-date gain through Wednesday’s close.

This earnings season, multiple tech firms announcing major spending hikes have faced investor skepticism. Meta (META.US) shares plunged after warning of 2026 capital expenditures "significantly higher" than 2025 levels.

DoorDash defended its strategy, stating, "We all wish growth required no investment, but neither life nor business works that way." The company acknowledged near-term cost pressures but emphasized confidence in its strong cash flow to fund expansion in competitive sectors like grocery and retail delivery.

Over the past year, DoorDash has pursued multibillion-dollar acquisitions to grow internationally and bolster enterprise services for restaurants. Its October purchase of Deliveroo expanded its European footprint, while the $1.2 billion SevenRooms deal added restaurant booking features in the U.S. and Australia.

Additionally, DoorDash is investing in autonomous delivery, including in-house robots and a partnership with Waymo (GOOGL.US).

Looking ahead, DoorDash expects sustained growth post-Deliveroo integration, projecting Q4 gross order value between $28.9 billion and $29.5 billion, with adjusted EBITDA of $710–810 million. Deliveroo is forecasted to contribute $45 million in Q4 and approximately $200 million to adjusted profits by 2026.