Uber
Inside the Numbers
Uber turned a surprise profit in the quarter and generated $0.58 in earnings per share, while analysts were expecting a loss $0.51. To compare, Uber lost $1.7 billion in last year's Q2, while it had a net income of $1.1 billion this quarter. However, a major factor was due to unrealized gains of its stakes in Didi
Thus, Uber's operating loss could be a better measure of its prospects as the company lost $1.2 billion in the quarter. However, revenue topped expectations at $3.93 billion vs. $3.75 billion.
The company reiterated that it expects to be profitable on an adjusted EBITDA basis by the end of this year and for Gross Bookings to reach between $22 and $24 billion. In Q2, gross bookings was $21 billion.
Of this, mobility accounted for $8.6 billion, up 184% from last year. Delivery came in at $12.9 billion, up 85%. Delivery revenue continue to expands and is an indication that its gains should hold as many new customers continue to utilize the service. The number of merchants on the platform reached 750,000 in the quarter.
The company addressed one of its biggest struggles - adding more drivers to the platform to reduce prices and wait times. So far, it's added 420,000 workers with 30% growth from June to July. In total, there were 1.51 billion trips in Q2, a 4% increase from Q1.
Stock Price Outlook
Uber is down by about 25% since mid-February. This follows a similar path as many reopening and growth stocks. Many bears on Uber are pointing to the company's continued operating loss as evidence that the company may never fully realize its lofty valuation.
This followed the direction of share prices which were weak following the report, but this weakness was quickly bought as share prices rebounded. Going forward, Uber remains quite risky especially given its inability to be profitable even in an improving environment.
Yet, its upside is undeniable as ride-sharing is bound to grow, and it is a leading company in the space. Traders, comfortable with the risk, should consider shares with a stop loss just below $40.