Uber shares dropped 7.5% in pre-market trading on Friday, following Uber’s results on Thursday after market close. The company’s shares are 4.5% below their May 9 IPO price of $45.
Among positives, some analysts pointed to an improvement in gross margins, while others highlighted that the revenue miss was down to a driver appreciation award related to Uber’s IPO.
Here’s what analysts have to say about Uber’s second-quarter results:
Loop Capital, Jeffrey Kauffman, Rob Sanderson (buy, $54 PT)
“Messy" set of results slightly overshadowed by “noise and confusion" from reporting complications. But top-line growth was a little better than expected, even if expectations had been raised by Lyft’s results.
But the long-term debate about Uber, similar to Lyft, revolves around when it will be a profitable business and “we see little to sway opinions more positive or negative" from the second-quarter numbers.
Morgan Stanley, Brian Nowak (overweight, PT up to $57 from $56)
Results show good top and bottom-line momentum, reasons to be bullish on Uber’s opportunity to become the “next mobile utility."
Profitability is coming through faster than expected with gross margins better across the board and recent marketing restructuring likely to lead to more efficient spending.
Adjusted net revenue miss almost entirely down to a one-off driver appreciation award related to the company’s IPO. The underlying results look “solid."
Overall, comes away from results “incrementally more positive" on Uber given improving competitive dynamics, with take rates on track to rise and with losses lessening.
Loup Ventures, Gene Munster
There was “more bad news than good" in Uber’s results and the bottom line for the firm is that as a growth company, “you have to beat your revenue numbers."
The biggest negative is Uber has a lower return on invested capital from its international strategy than rival Lyft does from its domestic push. Notably, Uber’s revenue per rider effective declined in the quarter, compared to a rise for Lyft.
Evercore ISI, Benjamin Black (outperform, $60 PT)
While Uber’s second quarter results and in-line full-year 2019 guide on the back of Lyft’s beat and raise was probably not enough short-term given the pop into the numbers, the overall print provided “a little something for both bulls and bears."
Evercore was encouraged by adjusted Core Platform (CP) take-rates expanding while operational leverage was “strong," though bears pointing to the ‘chicken and the egg’ problem over profits and growth may carry the day.
Bloomberg Intelligence, Mandeep Singh
A focus on boosting market share in both ride-sharing and food delivery is likely to remain a headwind for Uber’s revenue growth through the second half.
However, more stable pricing in the company’s mature markets should help margins in ride-sharing, though the margin contribution from food delivery is unlikely to improve much.
This story has been published from a wire agency feed without modifications to the text.
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