5/9/2024

Uber shares fell 9% after earnings

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Key points:

  • Taxi and delivery service Uber reported a net loss of $654 million.
  • However, revenue rose 15% to $10.13 billion (slightly above the forecast of $10.11 billion).
  • Lyft, Uber’s smaller rival, has seen demand grow.

Transport company Uber, specializing in food delivery and taxi service, gave its investors an unpleasant surprise by announcing an unexpected quarterly loss. Total orders fell below Wall Street forecasts, causing the company’s stock price to drop significantly, down 9%. As a result, Uber lost more than $10 billion in market capitalization.

Disappointment for the “bulls”

Instead of the expected growth, Uber encountered unforeseen difficulties, which negatively affected the company’s financial performance. Despite formal attempts to soften the blow, investors reacted to the news with concern, leading to a significant decline in share prices.

In addition to the unexpected quarterly loss, Uber also missed Wall Street forecasts for gross bookings in the first quarter. This key metric reflects the total dollar value of transactions completed on the company’s platform.

Uber’s chief financial officer, Prashant Mahendra-Raja, pointed to several factors that contributed to the decline in bookings. In particular, he noted the decline in demand for ride-sharing services in Latin America, as well as the impact of certain holidays during the first quarter.

Despite these challenges, Uber continues to dominate the taxi market. The company operates in approximately 70 countries around the world, offering a range of services including food delivery and cargo booking. Uber’s share of the US taxi market was 72% in the March quarter, up 4% from two years ago.

Lyft competitor benefits from Uber’s failures

Amid Uber’s unexpected quarterly loss, its smaller rival Lyft posted encouraging results, leading to a significant rise in its assets. Lyft, significantly smaller than Uber, operates only in the United States and parts of Canada.

As such, Lyft has seen industry-wide demand rise, while Uber has signaled a slowdown after achieving its first full-year profit in 2023, cementing its dominant position in the ride-sharing and food delivery market in the US.

Uber posted a net loss of $654 million, driven by legal fees, provisions and fair valuations for some of the company’s investments. Analysts had predicted net profit of $503.1 million.

Uber forecasts

Uber forecast second-quarter gross bookings, which measure the total dollar value of transactions made on its platform, to be between $38.75 billion and $40.25 billion, below Wall Street’s estimate of $40.04 billion.

In the first quarter ended March 31, Uber’s gross bookings reached $37.65 billion, which was also below analysts’ forecasts of $37.92 billion.

The company’s revenue for the quarter rose 15% to $10.13 billion, slightly exceeding expectations of $10.11 billion. Uber’s adjusted earnings per share were -$0.32, which was worse than the forecast of $0.23.

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