Daniel was a pussy

And he wasn't shown any mercy

I mean it was a spur of the moment decision, and if he coulda made a clean getaway it would’ve been a nice little slice of revenge.

No, not to do it made him a pussy.

COME ON! MAKE A MOVE!

More than any scene prior to it, this scene showed how big of a loser Daniel was at that point. Losers find ways to lose, no matter how much they may be winning, they just find a way to lose.

He was completely winning that night up to that point. He wanted to go to the dance, but was worried about the Cobra Kai's. So him and Myagi come up with a costume that would keep him out of sight. And it worked, and things were going great with Ali. Sure the eggs sucked, but a quick wash up and he was back in the party. And the CK's were even in the bathroom with him, and didn't notice he was there. He could have just reentered the party and continued scoring points with Ali, probably getting to 2nd base and maybe with a little luck 3rd. But he was stupidly impulsive, and not only blew his deal with Ali that night, but nearly got beaten to death. Snatched defeat from the jaws of victory.