The Rise and Fall of Uber: A Look at First Quarter Results

Key Takeaways

• Uber stock fell sharply in premarket trading Wednesday following the release of first-quarter results.
• Revenue met estimates while gross bookings fell short, and $721 million in charges related to revaluations of Uber’s investments led the company to report a surprising net loss for the quarter.
• For the current quarter, gross bookings are projected to range between $38.75 billion to $40.25 billion, mostly below the $40.12 billion analysts are projecting.

Uber Technologies’ shares took a hit in premarket trading as the company unveiled its first-quarter results. While revenue managed to meet expectations, gross bookings fell short, leading to Uber reporting a net loss after significant charges related to the revaluation of its investments.

Revenue Meets Expectations, Gross Bookings Miss, Revaluation of Investments Contributes to Net Loss

Uber reported $10.13 billion in revenue, surpassing the $10 billion mark for the first time as projected by analysts. However, gross bookings through the platform amounted to $37.65 billion, falling below expectations of $38.02 billion based on estimates compiled by Visible Alpha.

The company posted a net loss of $654 million, or 32 cents per share, contrasting with the anticipated profit of $477.2 million, or 22 cents per share. This unexpected loss was primarily driven by a $721 million pre-tax headwind related to “net unrealized losses related to the revaluation of Uber’s equity investments,” as stated by the company.

Comparing to the first quarter of 2023, Uber’s revenue stood at $8.82 billion with $31.4 billion in gross bookings and a net loss of $157 million, or 8 cents per share.

For the ongoing quarter, Uber projects gross bookings to fall within the range of $38.75 billion to $40.25 billion, representing an 18% to 23% year-over-year growth on a constant-currency basis. Analysts, however, are eyeing $40.12 billion in gross bookings according to Visible Alpha consensus.

Pre-Report News: Instacart Partnership, Analyst Thoughts

A day before releasing its financial results, Uber announced a collaboration with grocery delivery app Instacart to integrate Uber Eats restaurant delivery into the Instacart app nationwide in the upcoming weeks.

Instacart’s CEO Fidji Simo expressed excitement about the partnership, stating that it would provide customers with access to both online grocery selection and restaurant delivery through a single app.

Leading up to the earnings report, Jefferies analysts raised their target price for Uber stock to $100 from $95, citing potential top-line benefits from new booking methods introduced by the company. On the other hand, Bank of America analysts highlighted concerns about Uber’s strategy to address the emergence of autonomous vehicles from companies like Waymo and Tesla that could disrupt its business model.

Following the release of the report, Uber shares experienced a 9% drop initially but later recovered slightly to be down around 6% at $66.30 before the opening bell.

In conclusion, Uber’s first-quarter results reflect a mixed performance with revenue meeting expectations but gross bookings falling short and unexpected charges leading to a net loss. The company’s strategic partnerships and efforts to adapt to evolving market trends will be crucial in navigating future challenges and maintaining its competitive edge in the ridesharing industry.

Read the original article on Investopedia for more insights into Uber’s Q1 2024 earnings report.