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Uber Stock Has a Lot to Prove on Thursday

Rick Munarriz, The Motley Fool

After all of the pre-IPO hype and the post-debut letdown, Uber Technologies (NYSE: UBER) gets its first real chance to impress investors as a publicly traded company this week. The world's leading ridesharing service will offer up its first-quarter financials shortly after Thursday's market close. 

Uber is bringing up the rear with its earnings report this late in the season. There isn't going to be a lot of mystery behind the numbers. Uber's updated prospectus came out in mid-May, several weeks after the end of the quarter. The Securities and Exchange Commission filing offers up a tight range of how some of the key metrics played out through the first three months of the year. We may know a lot about how Uber's quarter ahead of Thursday's official announcement, but there are still a lot of things that can go right and wrong in the report.

Uber Eats app on a smartphone.

Image source: Uber Technologies.

Things we know

Earlier this month, Uber was targeting $3.043 million to $3.104 million in revenue for the first quarter, 18% to 20% ahead of where it was a year earlier. The only shock here would be if Uber doesn't land at or nearly at the high end of that range. Why offer up a range six weeks after a quarter ends unless you are going to stick the landing at the top. The 20% top-line growth will be a sharp deceleration from the 44% it achieved for all of 2018, but we already have a little more color on the slowdown.

Uber's popularity isn't growing as slowly as its top line or the even more somber 11% to 14% increase in adjusted revenue will attest to on Thursday. Gross bookings are expected to rise 33% to 35% -- 35%, natch -- but less of that money is trickling back to Uber. Its take rate is declining slightly on the personal mobility end but even more dramatically when it comes to Uber Eats. 

Uber Eats will see its gross bookings more than double for the quarter, but adjusted revenue will only climb 19% to 32% as excess driver incentives have more than tripled over the past year. Uber's larger personal mobility business will see its adjusted revenue grow at a mere 8% to 10% clip.

We also know that there will be a lot of red ink here. Uber's adjusted net loss will more than double and its adjusted EBITDA will more than triple. It won't be pretty. We also already know that monthly active platform consumers will clock in at 93 million, up nicely from the 70 million it was watching over a year earlier but a marginal uptick from the 91 million on its rolls when 2019 began. 

Things we don't know -- yet

Slowing growth and accelerating losses are a bad combination, but we already knew that before Uber hit the starting gate nearly three weeks ago. Some financial journalists who didn't dig into the prospectus will try to pass off some of the unflattering metrics as news, but we already know the bad stuff. 

Uber will have to impress us with guidance. It will have to earn its way out of this broken IPO jail cell by inspiring investors with its long-term vision. Uber can also wow the market by announcing new partnerships, but at the end of the day, investors just want to hear that these 10-figure quarterly losses will eventually pass and that Uber will at some point either grow its business or increase its take rate. 

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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.