Topline
Uber stock flailed Wednesday after the company reported a surprise quarterly loss, throwing a wrench in Wall Street’s celebration of the ride-hailing firm’s move to profitability.
Uber CEO Dara Khosrowshahi said the surprise loss had “nothing” to do with normal operations.
Key Facts
Shares of Uber are on track to suffer their worst daily percentage loss since Oct. 2022, falling 8% to $65 per share shortly after market open, which would be their lowest intraday level since late January.
The stock losses, which wiped out a cool $12 billion in market value for Uber, came after Uber announced Wednesday it took a $0.32 loss per share during the first quarter, far worse than consensus estimates of a $0.22 profit per share.
That ended Uber’s first-ever streak of consecutive profitable quarters, and its $654 million net loss is the steepest quarterly loss since 2022’s third quarter, coming in far below the prior period’s $1.4 billion net profit.
In its earnings release, Uber attributed the loss to a writedown of the company’s equity investments, with Uber CEO Dara Khosrowshahi declaring to CNBC the poor bottom line results had “nothing to do with the operating business.”
That interpretation is bolstered by the company’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) coming in at a record $1.38 billion, well above analyst estimates of $1.32 billion and nearly 82% higher than 2023’s opening quarter.
Uber’s record total revenue of $10.1 billion came in just above forecasts, though its gross bookings, or the total value of all rides and food deliveries booked on the Uber app, came in below estimates at $37.7 billion.
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Chief Critic
“The initial sell-off on results is overdone,” JPMorgan overdone Doug Anmuth and Neeraj Kookada wrote to clients about Uber stock’s precipitous post-earnings drop. The bank’s $95 price target for Uber is among the highest on Wall Street, indicating nearly 50% upside.
Key Background
It’s clear that Uber faced a high bar heading into earnings, considering its best-ever revenue, adjusted earnings and gross bookings predated the sharpest selloff in nearly two years. The brutal reaction reflects investors’ impatience regarding Uber’s profitability as it approaches its five-year anniversary as a public company. Analysts project Uber’s bottom line to grow quickly, with average estimates of a $2.7 billion net profit in 2024 almost 50% higher than 2023’s $1.9 billion profit and astronomically better than 2022’s $9.1 billion net loss. But Uber’s stock market performance already prices in much of the highly impressive bottom line turnaround, with shares still trading more than three times higher their 2022 nadir.
