Uber Shares Skid After $5.2 Billion Q2 Loss, Revenue Miss; Lyft Pulled Lower

Uber Technologies (UBER) shares tumbled in pre-market trading Friday after the world’s biggest ride-hailing group posted a wider-than-expected …

Uber Technologies (UBER) shares tumbled Friday after the world’s biggest ride-hailing group posted a wider-than-expected second quarter loss of $5.24 billion and cautioned that more red ink would follow in the months ahead.

Uber said its loss for the three months ending in June, the second quarterly report as a public company, came in at $4.72 per share, well ahead of the $2.70 tally forecasts by analysts that cover the group. Overall revenues, Uber said, rose 14% from last year to $3.17 billion, but again fell shy of the Street consensus forecast of $3.32 billion.

Looking into 2019, Uber said increased spending and expansion costs will likely mean the group posts a full-year loss of between $3 billion and $3.2 billion, but nonetheless sees gross bookings for the ride-sharing platform, which topped 100 million monthly active users in the second quarter, rising to an estimated range of between $65 billion and $67 billion.

“While you often have to make trade-offs in life, we believe that we can continue to invest aggressively and grow while driving efficiencies from scale by building great tech to improve effectiveness and from good old-fashioned focus on the bottom line,” CEO Dara Khosrowshahi told investors on a conference call late Thursday. “I think you know that the balance between the top and the bottom line is more of an art rather than a science. So I if I told you that we had kind of the scientific formulae that we’re solving for here, we’d be lying to you,”.

“We think that as we look at our marketing spend, our incentive spend, how we can leverage the business going forward, we think that there’s the opportunity to scale our expenses or be more efficient with our incentive spend or be more efficient with our marketing spend really doubled down on less, smaller kind of projects and doubling down on the channels that are really working for us,” he added.

Uber shares were marked 9.63% lower at the opening bell Friday to change hands at $38.83 each, a move that leaves the stock some 13.7% south of its May 10 IPO price of $45 per share.

Uber’s ride-hailing revenues grew just 2% from last year to $2.3 billion, the company said, although the average revenue per rider rose 20%. while Uber Eats, its food-deliver business, saw revenues rise 72% to $595 million.

The group’s overall results, however, offer a sharp contrast to its main rival, Lyft Inc. LYFT, which said yesterday that its loss for the three months ending in June was tabbed at 68 cents per share, notably lower than the $8.37 per share loss it booked last year and 32 cents inside the Street consensus forecast.

Group revenues, as well, impressed analysts’, rising 72% from the same period last year to a forecast-beating $867.3 million. Lyft said revenue per rider rose 22% from last year to $39.77, while the number of overall customers surged 41% to nearly 22 million in its first quarterly report as a public company.

Lyft shares were marked 1.61% lower in pre-market trading Friday, after posting a 3% gain Thursday, to indicate an opening bell price of $61.10 each.

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Uber Freight steers into Germany as $500 billion trucking market stares

US-based ride hailing pioneer, Uber Technologies has been launching a freight operation platform in Germany aimed at grabbing a share of Europe’s …

US-based ride hailing pioneer, Uber Technologies has been launching a freight operation platform in Germany aimed at grabbing a share of Europe’s $500 billion trucking market, a top executive of Uber said on Wednesday, the 24th of July 2019.

In point of fact, Uber Technologies, one of the most closely watched Silicon Valley giants, based on San Francisco, California, had begun to take on European tech start-ups earlier this following its launch of a freight platform in Netherlands earlier this year.

Nonetheless, while Germany would be Uber’s second freight market in Europe, another Uber executive had been quoted saying to a press agency on Wednesday (July 24th), that prospects of further expansions through the continent had been shimmering on the horizon as the company would soon begin to grab trucking market shares in the Europe’s largest economy.

At its home territory, Uber Freight service had already connected 48 states and generated over $125 million on Q2, 2019. Although, Uber’s earlier effort to establish a ride-hailing business in Germany was met with wide-ranging oppositions from taxi companies to politicians, Uber had consulted German transport industry giants alongside government officials in order to win support for its Freight business, said Uber Freight’s head of European expansion, Daniel Buczkowski.

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Cheaper rivals set to slow Uber’s path to profit

Uber Technologies’ path to profit is likely to be slowed by growing competition as a significant number of customers are willing to wait around for a …

Uber Technologies’ path to profit is likely to be slowed by growing competition as a significant number of customers are willing to wait around for a cheaper ride, according to analysts at HSBC.

The company, which went public in May, will need to fend off “tough and persistent” rivals that cater to price-conscious consumers, Masha Kahn and Henning Cosman wrote as they initiated coverage of the stock with a hold rating. Lyft often prices 20-25% below Uber in New York and Daimler-backed Bolt is now doing the same in London, they said.

Uber shares have recovered much of the 18% decline seen in the first few days that followed the company’s Wall Street listing, but have still trailed the broader US tech sector. HSBC gave the stock its 11th hold rating, while it has 23 buys and zero sells among analysts surveyed by Bloomberg.

Uber will also need to navigate tougher employment regulations and potentially higher taxes that could be imposed on the ride-hailing sector, the bank said.

In food delivery, “the big disadvantage is that Uber Eats does not have first-mover advantage in many markets”, meaning in some geographies it trails in terms of restaurant selection versus other applications.

“We struggle to make an argument that the risk-reward is skewed to the upside in the near term,” Kahn and Cosman wrote. — Reported by Joe Easton, with assistance from Gaurav Panchal, (c) 2019 Bloomberg LP

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Is Uber a Buy?

Investors have a chance to hail a ride on Uber Technologies (NYSE:UBER) — the stock, not the service — for slightly less than the $45 per-share price …

Investors have a chance to hail a ride on Uber Technologies(NYSE:UBER) — the stock, not the service — for slightly less than the $45 per-share price that IPO investors paid a little more than two months ago. We all love discounts, but is Uber broken or ready to bounce higher?

Calling the bottom on Uber has been a challenging game. The stock has actually hit its original $45 price four times in its brief publicly traded tenure, only to buckle under all four times. There is a lot to like about Uber in terms of its market dominance in a growing niche, but critics will counter that Uber’s slowing growth and SUV-sized losses are deal breakers. Let’s see how Uber stacks up on your buying radar.

A driver at night with an Uber beacon shining in his car.

Image source: Uber.

Waiting to be picked up

There’s never a shortage of news when it comes to Uber. This week alone we’ve seen Uber launch in Hamburg, its sixth city in German, as well one analyst report claiming that Uber may be interested in acquiring Uber Eats rival Postmates if the price is right. We also saw McDonald’s(NYSE:MCD) end its exclusivity with Uber for delivery, after the burger giant struck a deal to also make its menu available through DoorDash.

We’ll also get what should be stock-moving news early next month when Uber reports its financial results for the second quarter shortly after the market close on Aug. 8. This will be Uber’s second time announcing quarterly results since going public, but its earlier performance was spelled out pretty clearly in its IPO prospectus.

Despite the steady trickle of potentially game-changing news, Uber stock has been steadily trading in the low- to mid-$40s since June. Things are unlikely to stay that way for much longer.

Uber doesn’t mind making a lot of noise as it disrupts the personal mobility, food delivery, and even freight logistics markets. It’s succeeding. Uber had 93 million monthly active platform consumers by the end of the first quarter, and that figure will be undeniably higher when it announces its second-quarter metrics in three weeks.

Revenue growth has been slowing at Uber, particularly on a net basis as it ramps up the money it’s sending back to its drivers to keep them active and motivated. The red ink is substantial, and it’s expected to remain that way for years. However, the deep deficits should also help Uber grow in the near term by scaring away potential entrants and allowing it to cherry-pick the acquisition of rivals in an inevitable shakeout.

App-based ridesharing isn’t going away. Regulatory agencies, taxi and limo drivers, car dealerships, and even pizza chains may have issues with Uber and its peers, but the personal mobility market has been forever changed since the arrival of ride-hailing apps.

Uber is a broken IPO, but that doesn’t make it any less worthy as an investment. The industry is booming, and Uber is a clear leader. Getting in now at a sub-IPO price is actually a good thing. The valuation concerns remain, and they’re legitimate. Uber is trading at a market cap that is more than five times this year’s revenue, and you’ll have to wait until about 2025 before the bottom line turns positive to perform an earnings-based multiple. However, this is a market that will only continue to grow, and Uber should continue to be the one leading the revolution.

Uber 1, Amazon.com 0

Uber stock barely budged on the news, largely because the lion’s share of its revenue continues to come from the personal mobility side of its …

Apparently, when Amazon.com(NASDAQ: AMZN) throws in the towel, it takes the form of a kitchen towel. The world’s leading online retailer announced this week that it’s shutting down Amazon Restaurants, the fledgling eatery delivery service that competes with Grubhub(NYSE: GRUB), DoorDash, Postmates, Uber Technologies(NYSE: UBER) Uber Eats, and countless other upstart platforms. The restaurant service will be discontinued on June 24.

The end of Amazon Restaurants isn’t a surprise. Amazon seemed to be an early leader in this niche when it rolled the service out on its home turf of Seattle in 2015, and it quickly expanded to nearly two dozen major U.S. cities and London — but it never gained traction. Even now, when it’s been promoting free restaurant meal deliveries since May, it’s failed to gain the mindshare necessary to attract diners and, more importantly, drivers to its platform.

Amazon has done a lot of things right, but as with the Fire Phone, Amazon Local, and Askville, most Amazon fans won’t even notice if it bows out from this secondary business.

Uber Eats app running on a smartphone.Uber Eats app running on a smartphone.
Uber Eats app running on a smartphone.

Image source: Apple.

One less mouth to feed

Shares of Grubhub soared 8% on Tuesday, the day Amazon revealed that it’s shutting down Amazon Restaurants along with its smaller Daily Dish workplace lunch delivery service. Uber stock barely budged on the news, largely because the lion’s share of its revenue continues to come from the personal mobility side of its business.

Uber isn’t the pure play on meal delivery that Grubhub is, alongside privately held DoorDash and Postmastes, but it’s still a needle-mover for Uber. In fact, Uber Eats is growing faster than its flagship ridesharing platform, and it also scratches a few important itches for the recent IPO.

For customers, Uber Eats is a way to keep regulars close. As it pointed out in its prospectus last month, folks who use both Uber and Uber Eats wind up scheduling 11.5 trips a month. The average number of trips riders take using the personal mobility platform comes in at just 4.5.

Uber Eats also helps expand the number of drivers on its platform. Uber Eats vehicles don’t have to meet the same passenger quality standards as those for the personal mobility offering do. There are also people who would rather drive around warm meals instead of potentially chatty passengers.

Amazon Restaurants isn’t afraid to throw money at a business, but it never seemed to put up the same kind of effort as the rivals it will leave behind when it bows out later this month. Uber Eats works because the service is aggressive with its promotions. It also helps that Uber already has millions of drivers worldwide making a living or supplementing other job incomes through the platform.

Uber’s massive audience and driver base made it easy to build out Uber Eats. Amazon has always had the audience, but sometimes that’s just half the battle.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Grubhub and Uber Technologies. The Motley Fool has a disclosure policy.

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