Uber Posts Widened First Quarter Loss and Exits the Bike and Scooter Business

Uber Posts Widened First Quarter Loss and Exits the Bike and Scooter Business
May 11, 2020

 

The ride-hailing giant Uber Technologies, Inc. (NYSE: UBER) reported fiscal 2020 first-quarter net loss that widened from last year, reflecting the biggest loss in three quarters. While the revenue surpassed the Street expectations, net loss per share missed forecasts by a wide margin. Still, the company’s shares rose 6.01% or $1.86 Friday to close at $32.79 as CEO Dara Khosrowshahi stated that ride volume is increasing again after hitting rock bottom in mid-April. The shares of Uber have lost 39% since the company became public through IPO (initial public offering) at $45 per share. So far, in 2020, Uber shares have lost 8%.

The San Francisco-based company posted first-quarter 2020 revenues of $3.543 billion, an increase of 14% from $3.099 billion in the comparable quarter of 2019. Analysts polled by Thomson Reuters had anticipated the company to post revenues of $3.51 billion for the quarter. Adjusted net revenue (ANR), which includes the impact of Covid-19, for Q1, was $3.256 billion, an increase of 18% from $2.761 billion in the prior-year period.

For the quarter ended March 31, 2020, the company posted a quarterly net loss of $2.936 billion, or $1.70 per share, compared with a net loss of $1.012 billion, or $2.26 a share, in the prior-year period. On average, 31 analysts surveyed by Thomson Reuters anticipated the company to post a net loss of $0.83 per share for the quarter.

Barring impairment charges of $2.1 billion, net of the tax benefit, net loss attributable to Uber Technologies would have been $1.1 billion.

Segment-wise,

  • Rides posted revenues of $2.470 billion, up 2% on a y-o-y basis.
  • Eats recorded a 53% y-o-y increase in revenues to $819 million.
  • Freight generated revenues of $199 million, an increase of 57% from last year.
  • Other bets’ revenues grew 66% to $30 million.

Gross Bookings increased 8% y-o-y to $15.80 billion. On a constant currency basis, Rides recorded a 3% decrease in revenues, while Eats posted an increase of 54%.

Going forward, in 2Q 2020, the Street expects Uber to post revenues of $2.86 billion and a net loss of $0.71 per share. For FY 2020, the Consensus estimate currently calls for a loss of $2.48 per share on revenues of $14.37 billion.

While the CEO Dara Khosrowshahi acknowledged that Rides business dropped by roughly 80% in April (on a y-o-y basis), he underlined that ride volume has been picking up in the past three weeks.

Additionally, gross bookings for food delivery business (Eats) has increased 50% y-o-y to $4.68 billion as many people placed orders for home delivery of food, and several restaurants have enrolled to offer delivery. The CEO believes that the change in consumption patterns will be long-lasting. Gross bookings for rides stood at $10.87 billion at the end of the first quarter.

Khosrowshahi said, “The big opportunity we thought Eats was just got bigger.”

Notably, the company is spinning off Jump, its bike and scooter business to Lime, another ride-hailing company in which Uber has invested $85 million. Jump had been reporting a loss of roughly $60 million every quarter.

Earlier last week, Uber stated that it was bidding farewell to 3,700 of its staff and that Khosrowshahi would relinquish his base salary of about $1 million for the remaining 2020. The layoffs will affect the recruiting and customer support department, mainly, and reflect roughly 14% of the 26,900 people Uber said it employed at the end of last year.

Contradicting cost-cutting measures, an announcement made on Thursday indicated that Uber was leading a $170 million investment in Lime’s electric and bike rental business.

During the Q4 2019 earnings call, before the coronavirus outbreak, Khosrowshahi stated that it was on track to attain profit in the final quarter of 2020, earlier than the previous forecast of profitability in 2021. Additionally, during that call, Uber stated that it expects an EBITDA loss of $1.35 billion loss for FY 2020.

However, Covid-19 health directives from officials across the globe quickly started to limit people’s jobs, leisure, and travel in an intense manner, and by April 16th, Uber repealed the outlook.

Uber has been having a hard time with the negative effect of Covid-19 on both fronts, i.e., drivers and riders, and now faces a labor-related lawsuit in the state of California.

The lawsuit, filed in San Francisco Superior Court last week, blames Uber and Lyft of shying away from paying crucial benefits for their drivers, for example, paid sick leave, by unfairly categorizing them as contractors instead of employees. Uber CEO Dara Khosrowshahi argued that drivers should gain healthcare benefits proportional to the hours they work.

Even before the outbreak of the Covid-19 pandemic, Uber was struggling to survive. In the last few weeks, the company’s ride-hailing business has almost evaporated, raising investor worries. To put it in simpler terms, Uber primarily derives its revenues from travel, gatherings, and holidays. This has a negative impact on the company, as most people are confined to their homes.

The widened loss in the first quarter is anticipated to keep the stock range-bound with bearish bias in the short-term.

The historical price chart indicates that the stock is ascending after testing support at 27. The next resistance is anticipated only near 42. Additionally, the Chaikin money flow indicator also has a positive reading. Therefore, we are expecting the currency pair to move up in the short-term.

ube - techncial analysis - 11th May 2020

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.

Sammy

Sammy

Sammy is our forex expert, with over 20 years experience in the financial sector, she will be keeping you up to date with the ups and downs of currencies around the world


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