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Uber (UBER) Moves 11.5% Higher: Will This Strength Last?

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Uber Technologies (UBER) shares soared 11.5% in the last trading session to close at $44.36. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 3% loss over the past four weeks.

The stock surged following its bullish outlook for the third quarter of 2021, which hints at the company delivering adjusted EBITDA profits earlier than its previous expectation. Per a SEC filing, the company now expects adjusted EBITDA between negative $25 million and positive $25 million in the third quarter, compared with its previous expectation of “better than a loss of $100 million”. The company had earlier expected to achieve adjusted EBITDA profits in the fourth quarter of 2021.

This ride-hailing company is expected to post quarterly loss of $0.43 per share in its upcoming report, which represents a year-over-year change of +30.7%. Revenues are expected to be $4.4 billion, up 40.8% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Uber, the consensus EPS estimate for the quarter has been revised marginally lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on UBER going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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