Uber Share Price Slides On User Growth Disappointment Despite Expectation-Beating Revenues

Published On: November 6, 2019Categories: Stocks & Shares2.1 min read

Uber, the giant tech company that popularised the ride sharing app revolution and is also at the vanguard of the development of driverless vehicle, saw its share price slide in afterhours trading yesterday after it released its third quarter results. That was despite the revenue generated over the quarter coming in ahead of analyst expectations. However, falling short of forecasts for growth in active user numbers disappointed, sending the Uber share price down by almost 7% during afterhours trading.

However, the good news was that Uber showed 30% growth in revenues over the third quarter when compared to the same three months a year earlier. The final figure of $3.81 billion bettered Wall Street expectations for $3.69 billion. Unfortunately, that was not enough to allay fears over when, if ever, Uber will reach profitability as active user growth dampened investors’ spirits. Monthly active platform users rose to 103 million globally in the third quarter, up sharply from 82 million a year earlier but short of analysts’ estimates of 105.5 million.

Uber’s share price of $29.80 is currently around 30% lower than the $45 dollars the company IPO-ed at earlier this year.

The now traditionally huge Uber net loss expanded to $1.16 billion from $986 million last year. Losses have now come in at over $1 billion for three consecutive quarters. After interest, taxes and charges, the bottom line loss was $458 million. An improvement on the $660 million haemorrhaged over the previous quarter but still unsustainably high. Overall, costs rose 33% to $4.29 billion in the quarter.

There could be more bad news in store for Uber investors with the 180-day post-float lock-up period for early investors ending on November 6th – tomorrow. That means larger chunks of Uber shares could be released onto the market, if investors come to the conclusion it is time to cut their losses, or at least hedge their bets against further drops. The result could be a further significant drop in the company’s market capitalisation and investor eyes will be watching the situation keenly tomorrow. It is estimated that as many as 1.7 billion Uber shares, 90% of the total issued by the company, will be sellable as of tomorrow.

But back to the silver lining of the positives that yesterday’s report did contain – much of the earnings growth banked came from Uber’s core ride-hailing unit. Revenues there were up 19% to $2.9 billion. Uber Eats, the restaurant and take-away order and delivery service was the company’s star performer on growth – up 64% compared to last year. It brought $645 million into the coffers.

Uber’s other units include a bike and escooter rental unit, a freight business, the autonomous-driving technology operation and even a division that is working on bringing flying taxis to a mass market.

CEO Dara Khosrowshahi commented:

 “Our results this quarter decisively demonstrate the growing profitability of our Rides segment.”

About the Author: Jonathan Adams

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