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Uber (UBER) Up on Narrower-Than-Expected Q4 Loss & Rosy View

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Uber Technologies, Inc. UBER released its fourth earnings report since going public in May. The company incurred a loss of 64 cents per share (or net loss of $1.1 billion, up 24% year over year) in the fourth quarter of 2019, narrower than the Zacks Consensus Estimate of a loss of 68 cents. Moreover, the amount of loss decreased year over year. However, total revenues of $4,069 million missed the Zacks Consensus Estimate of $4,099.8 million but rose 37% year over year.

The better-than expected bottom-line performance coupled with the company’s commentary that it will reap profits on an adjusted basis by the fourth quarter of 2020, boosted investor confidence in the stock. Consequently, shares of the company rallied more than 5% in after-hours trading on Feb 6. Previously, Uber expected to achieve EBITDA profit for the full year in 2021.

Following an organizational change in the third quarter of 2019, Uber started reporting through five segments, namely Rides, Eats, Freight, Other Bets, and Advanced Technologies Group (ATG) and Other Technology Programs.

In the fourth quarter, majority (75.1%) of the company’s revenues came in from Rides, which increased 27% to $3,056 million. Uber Eats revenues jumped 68% to $734 million while Freight revenues soared 75% to $219 million.

Total revenues grew 41% to $2,536 million in the United States and Canada. The same rose 27% to $621 million in Europe, the Middle East and Africa. While total revenues surged 34% to $359 million in the Asia Pacific region, it increased 31% to $553 million in Latin America. Monthly active platform consumers also grew 22% to $111 million.

Gross bookings from Rides improved 18% to $13.51 billion while the same from Eats augmented 71% to $4.37 billion. Gross bookings from Freight also climbed 74% to $219 million. Total gross bookings ascended 28% to $18.13 billion.

Additionally, cost of revenues (excluding depreciation and amortization) at Uber, which competes primarily with Lyft LYFT in the ride hailing market, escalated primarily due to higher driver incentives. Total expenses on sales and marketing shot up 22.1% to $1.25 billion in the reported quarter.

Uber, carrying a Zacks Rank #2 (Buy), exited the fourth quarter with cash and cash equivalents of $10.87 billion compared with $6.41 billion at the end of 2018. Long-term debt, net of current portion, at the end of the quarter was $5.71 billion compared with $6.87 billion at 2018 end. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Key Picks

Some other top-ranked stocks in the same space are Aspen Group Inc. ASPU and Match Group, Inc. MTCH, both carrying the same Zacks Rank as Uber.

Shares of Aspen and Match have gained more than 100% and 42%, respectively, in a year’s time.

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