Uber’s results disappointed analysts, who noted the ride-hailing company failed to beat sales estimates even as competitor Lyft recently posted expectation-busting earnings.
Reactions included “messy" and “more bad news than good." With a loss of $5.2 billion for the second-quarter, the business update also reignited debate about when the company might turn a profit.
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.
RBC, Mark Mahaney (outperform, $62 PT)
- 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.