In This Article:
What Happened?
Shares of ride sharing and on demand delivery service Uber (NYSE: UBER) fell 7.4% in the pre-market session after the company reported weak fourth-quarter results: gross booking guidance for the next quarter missed, and this is weighing on shares. Also, the comments during its earnings call suggest that Uber might take longer to commercialize the autonomous vehicle business. This stands in contrast to bullish comments by Tesla about its impending Robotaxi rollout. Also, while earnings exceeded expectations, it was largely driven by a $6.4 billion tax valuation release rather than operational improvements.
On a brighter note, Uber increased its number of users this quarter, beating expectations. This led to revenue outperformance. Overall, this was a mixed yet weaker quarter for the company.
The shares closed the day at $64.49, down 7.5% from previous close.
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What The Market Is Telling Us
Uber’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 12.1% on the news that peer, Lyft reported fourth-quarter results indicating growing users, enabling it to beat Wall Street's revenue and EPS estimates.
Lyft reported that Rides growth accelerated for the fourth quarter in a row to 26% year on year in the quarter. In addition, Lyft's guidance for Q1 2024 came in ahead of expectations for gross bookings (from which the company generates revenue by taking a cut) and adjusted EBITDA, showing that both near-term growth and profits are better than expected.
Lastly, Lyft expects to generate positive free cash flow for the full year 2024, converting roughly half of its forecasted full-year EBITDA into cash. This is a nice milestone.
Overall, the results demonstrate a strong demand for ride-sharing services amid worries about a slowing economy.
In addition, Uber announced its first ever share repurchase program of up to $7 billion of its common stock authorized by its Board of Directors. CFO Prashanth Mahendra-Rajah added "Today's authorization of our first-ever share repurchase program is a vote of confidence in the company's strong financial momentum. We will be thoughtful as it relates to the pace of our buyback, beginning with actions that partially offset stock-based compensation, and working towards a consistent reduction in share count."