Uber’s Mixed Q3 Earnings Report Sends Stock Tumbling
Despite reporting a revenue of $11.2 billion, a 22% increase from last year, Uber’s stock took a hit on Thursday, closing down 9% after missing estimates on gross bookings. The ride-hailing giant’s gross bookings, a key metric tracking total revenue before fees and deductions, came in at $41 billion, up 16% from last year but falling short of estimates.
A Record Quarter of Profitable Growth
Uber CEO Dara Khosrowshahi highlighted the company’s strength, citing a record quarter of profitable growth at a global scale. The company’s platform now boasts over 25 million Uber One members, a significant milestone. CFO Prashanth Mahendra-Rajah added that Uber has reached another important milestone, delivering over $1 billion in GAAP operating income for the first time in its history.
Guidance Falls Short of Expectations
While Uber projects Q4 gross bookings to grow 16% to 20% year-over-year, its Q3 gross bookings growth rate of 16% was not enough to impress investors. The company’s EBITDA guidance of $1.78 billion to $1.88 billion also fell short of expectations. Analysts had expected more robust growth, leading to a decline in Uber’s stock price.
Delivery Business Shines
One bright spot in Uber’s report was its delivery business, which saw gross bookings rise 17% year over year to $18.66 billion. JPMorgan analyst Doug Anmuth noted that Uber can continue to grow the Delivery category profitably by improving network efficiencies, scaling advertising, and strengthening marketing and incentive optimization. Anmuth maintained his Overweight rating and $95 price target on Uber.
Analysts Weigh In
Wedbush analyst Dan Ives wrote that while Uber’s guidance was in line with consensus, it did not clear investor expectations. However, Ives believes Uber is well-positioned to deliver mid-teens bookings growth over the intermediate term with rising margins and strong free cash flow conversion. He maintained his Outperform rating and $86 price target.
Looking Ahead
Despite the mixed report, Uber’s strong platform and growing delivery business suggest a promising future. As the company continues to focus on improving efficiencies and scaling its operations, investors will be watching closely to see if it can meet its growth targets and regain momentum.
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