The shares of Uber Technologies Inc (NYSE: UBER) fell by 8.85% or $4.53 to close at $46.65 Thursday following the report of lower-than-anticipated fiscal 2021 first-quarter revenue.
However, the ride-hailing company posted a net loss that was far below the expectations of Wall Street analysts.
San Francisco, the California-based company, reported first-quarter 2021 revenues of $2.903 billion, down 11% from $3.248 billion in a similar period last year.
The quarter ended March 31, 2021; the company posted a net loss of $108 million, or $0.06 per share, narrowed from a net loss of $2.936 billion, or $1.70 a shared quarter ended March 31, 2020. In the previous quarter, the company had reported a loss of $968 million.
Analysts polled by Refinitiv had anticipated the company to post earnings of $0.54 per share on revenues of $3.29 billion for the reported quarter.
Commenting on the quarterly results, Uber CEO Dara Khosrowshahi said, “Uber is starting to fire on all cylinders, as more consumers are riding with us again while continuing to use our expanding delivery offerings.”
Segment-wise,
- Mobility revenues declined 65% y-o-y to $853 million.
- Delivery revenues were $1.741 billion, an increase of 230% on a y-o-y basis. Uber was very much dependent on the delivery division to minimize the loss of business in the Mobility division due to COVID-19 related travel restrictions. Uber disclosed that Eats segment revenues increased by 28% on a q-o-q basis. Furthermore, merchants on Uber Eats surpassed 700,000 in 1Q 2021, including Mr. Beast Burger, Smoothie King, and Rite Aid.
- Freight revenues were $301 million in 1Q 2021, up 51% from $199 million last year.
The sharp decline in the net loss was mainly due to a $1.60 billion benefit from the divestment of ATG, the self-driving division of Uber. The company’s operating loss remained high at over $1.50 billion.
Gross bookings in the mobility division declined 38% y-o-y to $6.77 billion. On the contrary, gross bookings in the delivery division increased 166% to $12.46 billion. Overall, gross bookings surged 24% y-o-y to $19.50 billion in Q1 2021.
During the quarter, the company also inked a deal with GoPuff to offer additional convenience stores and grocery items. Starting June, the facility will be offered by Uber to its customers.
The company also faces an urgent need for drivers as it is witnessing a surge in demand due to the relaxation of restrictions following the beginning of the vaccination program. In April, the company stated that it intends to spend $250 million as a one-time bonus to bring back drivers.
Uber has roughly 3.50 million drivers and couriers on its database, increasing 4% on a q-o-q basis but down 22% year-on-year.
The firm was under pressure in the UK after the country’s Supreme Court backed a decree that its drivers are employees and not standalone contractors.
Uber took charge of $600 million in the ride-hailing revenue to resolve the issues (past claims) related to the classification by the UK Supreme Court.
If a similar classification is approved in the US, Uber may find it difficult to turn into a profit-making entity.
As the COVID-19 pandemic severely affected transit last year, it is not appropriate to compare the 1Q 2021 figures with 1Q 2020.
Nevertheless, Uber has started to bounce back on the relaxation of restrictions following the roll-out of vaccines.
The mixed quarterly results are expected to keep the stock range-bound with a slight bearish bias.
Technically, the stock is declining after facing resistance at 60. The next significant support is anticipated only near 40. Additionally, the stock has closed below its 50-day moving average, while the MACD indicator has a negative reading. Therefore, we are anticipating the stock to remain bearish in the short term.
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