Uber Shares Jump After Finally Set to Halt Quarterly Losses
(Bloomberg) -- Uber Technologies Inc., the ride-hailing giant that once posted a quarterly loss of $5.2 billion, may finally be about to turn an adjusted profit.
Shares in Uber were up about 7% in the first minutes of trading in New York Tuesday, while rival Lyft Inc. also rose 3%.
Uber’s adjusted earnings before interest, taxes and other expenses may range from a $25 million loss to a $25 million profit in the third quarter, it said in a filing Tuesday. On that basis a profit would arrive slightly earlier than previously anticipated, as Chief Executive Officer Dara Khosrowshahi had told analysts in August that a fourth-quarter adjusted profit was in reach. Uber said Tuesday adjusted earnings in the fourth quarter could range from flat to a $100 million profit.
The San Francisco-based company’s major U.S. competitor, Lyft Inc., reported its first adjusted quarterly profit during the second quarter, also ahead of schedule. Lyft benefited from a lifting of Covid-19 restrictions in many U.S. cities as vaccinations ramped up early in the summer, driving a surge in ride-hailing use.
Uber did, too, but its sprawling business operates in many more countries and offers many other services besides rides. Those aspects were not nearly as profitable and its report of second quarter losses dismayed investors. Uber faces increased competition for its food delivery service and uncertain demand for its rides as the pandemic lingers in many parts of the world.
The boom in food delivery during the pandemic skewed Uber’s business toward a lower-margin segment that may have weighed on efforts to become profitable, Bloomberg Intelligence analyst Mandeep Singh wrote in September.
However, customers hung on to their habits of getting hot meals sent directly to their homes, even as lockdown restrictions eased in many countries. U.K. rival Deliveroo Plc reported a surge in revenue and orders in the first half of the year.
Uber still faces pressure from politicians and regulators on the status of its drivers. It recently lost a Dutch suit, where a court ruled that those who ferry passengers using the Uber app in the Netherlands are covered by a local collective labor law. In August California state judge struck down a voter-approved ballot measure bankrolled by Uber and other gig-economy companies that declared drivers for the companies were independent contractors.
Uber has said it would appeal both decisions.
©2021 Bloomberg L.P.