Uber's stock falls after weaker guidance and wider losses

Uber said it crossed 2.6 billion trips in the last quarter. Reuters

Ride-hailing company Uber’s shares took a dive on Wednesday after the company issued weaker guidance for the June quarter and posted a surprise loss in the first quarter of this year.

The company’s net loss in the three months to the end of March widened to $654 million from $157 million in the prior-year period. Uber said its net loss includes a $721 million net headwind from unrealised losses related to the reassessment of its equity investments.

Analysts were expecting a net profit of more than $500 million in the last quarter.

Uber’s stock dropped 9.09 per cent to trade at $64.03 a share at 8.10pm UAE time (12.10pm New York time), giving the company a market value of $133.45 billion. However, the stock has surged almost 10 per cent since the start of the year.

“We were already expecting a deceleration in average spending in several markets due to slower-than-expected economic activity in the US in the first quarter and persistent consumer pressures. However, this is way above the base case,” Thomas Monteiro, senior analyst at Investing.com, told The National.

“This casts significant doubt over the company's ongoing turnaround towards a leaner, more focused operation, forcing [Uber’s chief executive] Dara Khosrowshahi to rethink strategies from top to bottom, particularly as we expect a tougher H2 in several markets.”

The company posted a revenue of more than $10.13 billion in the January-March period, nearly 15 per cent up on an annual basis, exceeding analysts’ expectation of $10.11 billion.

Uber predicted its second quarter’s gross bookings, or the total dollar value earned from its services, to hover in the range of $38.75 billion to $40.25 billion. Its mid-point is below the analysts’ estimates of $40.04 billion.

The company expects its adjusted income to range between $1.45 billion and $1.53 billion.

Mr Khosrowshahi told CNBC the company’s loss had “nothing to do with the operating business”.

“We did have to mark down those equity stakes that resulted in a loss … we don’t expect that to keep happening going forward.”

The company’s last quarter operating income stood at $172 million, up from a loss of $262 million in the same period last year.

The company’s gross bookings surged 20 per cent year on year to more than $37.6 billion in the first quarter.

Delivery gross bookings increased 18 per cent to $17.6 billion and mobility bookings surged 25 per cent to $18.6 billion.

Freight unit bookings – which include transport, logistics, supply chain and storage solutions – dropped 8 per cent yearly to almost $1.3 billion.

“More than 7 million people now choose to earn flexibly on Uber every month, with driver earnings of $16.6 billion continuing to grow faster than our top-line,” Mr Khosrowshahi said.

The company also crossed 2.6 billion trips in the last quarter – an average of nearly 1.16 million trips per hour, or almost 28 million trips per day, with the company defining trips as the number of completed consumer mobility rides and delivery orders in a given period.

The monthly active platform consumers reached 149 million in the previous quarter. It grew 15 per cent year-on-year, driven by continued improvement in consumer activity for both mobility and delivery offerings, Uber said.

Uber’s chief financial officer Prashanth Mahendra-Rajah said the company’s multi-year growth framework is on track, with audience up 15 per cent and frequency up 6 per cent in the first quarter.

"As we still expect financial conditions to improve, this may very well open the door for competitors currently positioned on a better part of the growth curve," Mr Montiero said.