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Uber Expects Charge of up to $2.2B in Q1 Due to Coronavirus

Zacks Equity Research
·3 min read
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Uber Technologies, Inc. UBER withdrew its 2020 guidance for gross bookings, adjusted net revenues and adjusted EBITDA as coronavirus concerns mount, presumably weighing significantly on the company’s demand for rides. Previously, gross bookings were expected between $75 billion and $80 billion while adjusted net revenues were anticipated in the range of $16-$17 billion. Meanwhile, adjusted EBITDA loss was predicted in the $1.45 -$1.25 billion band.

As far as Uber’s first-quarter 2020 is concerned, the company had announced a financial assistance program for drivers and delivery people whose income opportunities have been reduced due to the pandemic. In this regard, the company’s impending earnings result will reflect Contra Revenue, which is expected to have reduced GAAP revenues by $17-$22 million in the first quarter (results will be available on May 7). The same is anticipated to lower GAAP revenues by $60-$80 million in the second quarter.

Further, with lockdowns across several nations, some of the company’s minority equity investments shed value (Uber has minority stakes in Didi, Grab and Zomato among others). As a result, it expects to have incurred an impairment charge of $1.9-$2.2 billion in the first quarter, which is likely to have widened GAAP net loss by the same amount. However, the expense is not expected to have affected its adjusted net revenues, adjusted EBITDA, cash and cash equivalents or short-term investments.

While the coronavirus pandemic is hurting Uber’s ride-hailing business by confining people to their homes, the same is causing a surge in its Eats business as more people are preferring to order food online while adhering to social distancing norms.

Zacks Rank & Key Picks

Uber carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are 21Vianet Group, Inc. VNET, Dropbox, Inc. DBX and Baidu, Inc. BIDU. While 21Vianet and Dropbox sport a Zacks Rank #1 (Strong Buy), Baidu carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of 21Vianet Group have rallied more than 100% in a year’s time. Both Dropbox and Baidu have an impressive earnings history. While Dropbox’s earnings outperformed the Zacks Consensus Estimate in each of the preceding four quarters, Baidu’s bottom line surpassed estimates in three of the last four quarters (in-line result in one).

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