Uber (NYSE:UBER) shares down again on Monday as poor Q2 report shocks investors

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Updated: 13 August 2019
  • Ride-hailing giant posts -$4.72 GAAP EPS and $3.17bn revenue versus -$2.70 loss and $3.32bn consensus
  • Expects full-year loss between $3–$3.2bn as IPO and expansion costs take toll
  • Shares crater on Friday (-10%) and remain lower on Monday

Uber Technologies (NYSE:UBER) shares were still subdued on Monday after taking a battering late last week on a lacklustre Q2 report showing a $5.24bn loss and guidance for further weakness in the coming months.

The world’s biggest ride-hailing group posted -$4.72 GAAP EPS and $3.17bn revenue for the three month period ending 30th June, which was $1.53 and $220m below the Wall Street consensus, respectively. However, group revenues did rise 14.4% year-over-year.

Uber said gross bookings are set to climb to $65–$67bn for the full year but warned that costs associated with expansion and further spending will keep the company in the red for the foreseeable future. It forecast a loss of $3–$3.2bn for the calendar year (2019).

“While you often have to make trade-offs in life, we believe that we can continue to invest aggressively and grow while driving efficiencies from scale by building great tech to improve effectiveness and from good old-fashioned focus on the bottom line,” CEO Dara Khosrowshahi said in a statement.

Uber shares had soared on Thursday in anticipation of a strong quarterly report – the second since its IPO earlier this year – but investors were shocked by the extent of the company’s losses, and shares slumped 10% to less than $39 in Friday’s premarket. After a brief rally late in the session, shares were down again on Monday.

However, analysts and market watchers are not ready to abandon the San Francisco-based company just yet, despite there being no clear path to profitability at the current time. RBC analyst Mark Mahaney stood pat on his Outperform rating and set a higher $62 price target after talking up Uber’s long term prospects.

He said: “At the margin, we come away incrementally more positive on Uber given competitive dynamics improving, take rates on track to move up sequentially, product enhancement driving more multi-offering users, and EBITDA losses lessening.”

Mahaney also pointed to Uber’s dominant position in the rideshare market and its healthy 30% gross bookings growth. Morgan Stanley’s Brian Nowak was also bullish after backing Uber to transform its platforms and customer experience with new tech, rewards and subscription offerings, which will support a “growing, sticker user base.”

Wedbush Securities’ Dan Ives did shave $7 off a new $58 price target on Friday – mainly due to the fact that the Street had strapped itself in for an A+ showing following on from its initial public offering. He also believes the “lack of profitability” will invite scepticism and not help the company to become a more credible option on Wall Street.