Uber Sinks as Results Underwhelm Analysts in Lyft’s Shadow
Uber shares dropped as much as 9.9 percent on Friday, following results on Thursday after the market had closed.
(Bloomberg) -- Uber Technologies results disappointed analysts after the ride-hailing company failed to beat sales estimates even as competitor Lyft recently posted expectation-busting earnings.
Analysts called the quarter “messy” and offering “more bad news than good.” With a loss of $5.2 billion for the second-quarter, the business update also reignited debate about when Uber will turn a profit.
Uber shares dropped as much as 9.9% on Friday, following results on Thursday after the market had closed. Uber is now down 13% since its initial public offering in May. Lyft shares, meanwhile, slid 2.2%, giving back some of Thursday’s gains after a beat-and-raise report.
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:
Citi, Itay Michaeli (neutral, PT $45)
- Uber’s second quarter didn’t deliver the degree of upside that was likely implied by the stock’s 8% rally Thursday, post Lyft’s beat/raise, but the quarter did show progress with respect to sequential take-rates and operating leverage, particularly within Rides.
- “We thought management conveyed an upbeat tone regarding the Rides competitive environment, as well as the path to profitability.”
Susquehanna, Shyam Patil (neutral, PT $42)
- “While we continue to view Uber as a once-in-a-generation company with an opportunity to revolutionize transportation and logistics, we believe business complexity, lack of visibility into forward numbers, and a precarious competitive landscape are likely to keep shares range bound.”
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 was almost entirely down to a one-time 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.
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.
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.
--With assistance from Esha Dey.
To contact the reporters on this story: Sam Unsted in London at sunsted@bloomberg.net;Kit Rees in London at krees1@bloomberg.net
To contact the editors responsible for this story: Beth Mellor at bmellor@bloomberg.net, Catherine Bosley, Namitha Jagadeesh
©2019 Bloomberg L.P.