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Uber (UBER) Shares Decline on Wider-Than-Expected Q2 Loss

Zacks Equity Research

Uber Technologies, Inc. UBER released its second earnings report since going public in May. The company incurred loss of $4.72 per share (or a net loss of $5.24 billion) in the second quarter of 2019, wider than the Zacks Consensus Estimate of a loss of $3.33. Moreover, the amount of loss increased year over year. Results were affected by heavy expenses on sales, promotions and marketing to attract riders as well as drivers. These expenses totaled $1.22 billion in the quarter, up 71% year over year.

Following this dismal performance, shares of the company declined more than 6% in after-hours trading on Aug 8.

What’s worse is that the company has warned of the huge losses to persist through 2019 since this will be its “peak investment year”. However, losses are anticipated to be reduced beyond this year.

Detailed Results

Although revenues climbed 14% year over year to $3,166 million, the same missed the Zacks Consensus Estimate of $3,407 million.

Uber reports through two segments, namely Core Platforms and Other Bets. While the Core Platforms includes the company’s core business ridesharing apart from its food delivery business — Uber Eats — the Other Bets segment comprises freight and logistics platform among other things.

In the second quarter, majority (93.8%) of the company’s revenues came from Core Platforms. Within the Core Platforms unit, ridesharing revenues inched up 2% to $2,348 million with gross bookings ascending 20%. Uber Eats revenues jumped 72% to $595 million with gross bookings surging 91%.

Core Platform revenues grew 19% in the United States and Canada to $1,776 million and 22% in Europe, the Middle East and Africa to $502 million. While Core Platform revenues increased 13% in the Asia Pacific region to $276 million, the same dropped 24% in Latin America to $417 million.

At the Core Platforms segment, gross bookings surged 30% while the measure soared in excess of 100% at the company’s Other Bets segment. In the quarter, total gross bookings increased 31% to $12.01 billion. Monthly active platform customers grew 30% to 99 million in the same period.

Additionally, cost of revenues (excluding depreciation and amortization) at Uber, which competes primarily with Lyft LYFT in the ride hailing market, rose primarily due to higher driver incentives. In fact, Uber is also spending significantly on promotions and driver incentives in a bid to gain a market share similar to Lyft.

Uber, carrying a Zacks Rank #2 (Buy), exited the second quarter with cash and cash equivalents of $11.74 billion compared with $6.41 billion at the end of 2018. Long-term debt, net of current portion, at the end of the quarter stood at $4.53 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.

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Click to get this free report Alphabet Inc. (GOOGL) : Free Stock Analysis Report Lyft, Inc. (LYFT) : Free Stock Analysis Report Uber Technologies, Inc. (UBER) : Free Stock Analysis Report Bilibili Inc. Sponsored ADR (BILI) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research