Student loan payments will resume. That could dent this food delivery stock, MoffettNathanson says


MoffettNathanson reports that student loan repayments will resume in October. This means that borrowers won’t have as much money to spend on DoorDash. The firm has reduced its rating for the food delivery stock from market perform to $93 and its price target down to $93 instead of $110. Does the return of loan repayments create a bookings risk for food delivery? In a note published on Friday, Michael Morton said that the resumption of loan repayments could lead to a risk in food delivery. “We fear that the answer is yes.” The Department of Education is ending its Covid-relief relief pause for federal loan borrowers after three years. On Sept. 1, student loan interest began to accrue, and payments are due in October. MoffettNathanson estimates that borrowers may be responsible for $225 in monthly student loan repayments. DoorDash is the only company that has more monthly active users between the ages of 25 and 44 than any other in the coverage area, according to the analyst. Morton, citing federal data, said that “unfortunately, these age groups carry 69%” of U.S. Student Loans. The analyst said that while DoorDash’s shares are up 64% in the past year, they don’t reflect the risks facing the company. He said that he was concerned about the expectations of bookings growth in FY24 at 15% on a new 300M order. This does not seem to reflect a 16% cut in the discretionary incomes of 43 million consumers. Michael Bloom, CNBC’s reporter, contributed to this report.