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How Should You Play UBER Stock After the Q3 Earnings Miss?
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Key Takeaways
Uber's Q3 EPS plunged 92% to 25 cents, missing estimates, while revenues rose 9.6% to $14.77 billion.
UBER expects Q4 gross bookings of $63.25B-$65.25B, with FX headwinds likely to trim reported growth.
Uber's AV partnerships and diversification support long-term growth, amid debt woes.
Last week, Uber Technologies (UBER - Free Report) reported lower-than-expected earnings per share, with high fuel costs from the Middle East conflict hurting the bottom line. The bottom line also contracted sharply year over year.
Revenues marginally beat the Zacks Consensus Estimate and also increased year over year, driven by gross bookings growth. Moreover, foreign exchange headwinds are likely to hurt fourth-quarter results.
Given this backdrop, let’s first review the third-quarter results.
UBER’s Q3 Earnings Snapshot
Earnings of 25 cents per share missed the Zacks Consensus Estimate of 94 cents. The figure declined 92% from $3.11 per share in the year-ago quarter. The earnings miss was the second one in the past four quarters, beating the mark on the other occasions. The average miss is 9.9%.
Revenues increased 9.6% year over year to $14.77 billion and marginally surpassed the consensus estimate of $14.74 billion. Gross bookings increased 20% year over year to $59.82 billion, supported by higher trip volumes and expanding consumer engagement. However, a shortage of drivers and an uptick in fuel costs due to the Middle East conflict hurt results. The elevated fuel price impact in markets like Brazil and India meaningfully impacted the supply situation.
The Mobility segment fared below the company’s expectations, with segmental revenues declining 2% year over year on both a reported and constant-currency basis to $7.52 billion. Segmental results were hurt by driver supply failing to keep pace with strong consumer demand in several international markets.
The Delivery segment fared well, with segmental revenues increasing 23% year over year on both a reported and constant-currency basis to $5.49 billion. The segment benefited from expanding platform activity and continued growth in consumer demand.
FX Woes Likely to Hurt Uber’s Q4 Results
For the fourth quarter, Uber anticipates gross bookings between $63.25 billion and $65.25 billion. The guidance implies constant-currency growth of 18-22% year over year, with an anticipated currency headwind of approximately 1 percentage point to reported growth. The Zacks Consensus Estimate for this key metric is currently pegged at $64.28 billion.
Non-GAAP earnings are projected to be between 95 cents and 99 cents per share, representing year-over-year growth of 34-39%. Adjusted EBITDA is expected to be in the range of $3.13 billion to $3.23 billion.
Uber’s AV Ambitions Impress
In view of the rapidly expanding autonomous vehicle (“AV”) market, Uber is adopting a partnership-focused strategy to capitalize on emerging opportunities. By working alongside multiple technology leaders, the company has been able to avoid the substantial research and development costs associated with building in-house AV capabilities, while still progressing toward its automation ambitions.
Management expects approximately 700 fully driverless vehicles on its platform by the end of 2026 and more than 2,000 in 2027. Partnerships with the likes of Chinese companies WeRide (WRD - Free Report) and Baidu (BIDU - Free Report) have already ensured Uber’s presence in the driverless arena in many international markets.
In April, WeRide and Uber partnered to introduce fully driverless, fare-charging robotaxi services in Dubai. This initiative marks one of the earliest deployments of Level 4 autonomous vehicles for commercial use in the city and represents a significant milestone in their collaboration. This development aligns with the UAE’s broader smart mobility vision and strengthens WeRide’s partnership with the Roads and Transport Authority.
Baidu's Apollo powers Apollo Go robotaxis, with millions of rides and plans to expand beyond China. The company has developed one of the most extensive autonomous driving ecosystems through its Apollo platform, an open-source initiative launched in 2017 to accelerate innovation in self-driving technology across software, hardware and cloud services.
UBER’s Overall Price Performance Is Unimpressive
Uber’s shares have declined in double digits (% -wise) year to date, underperforming the Zacks Internet-Services industry over the same time frame.
YTD Price Comparison
Image Source: Zacks Investment Research
Valuation Picture
From a valuation perspective, Uber’s shares are cheaper compared with its industry on the basis of price/earnings (F12M). The company has a Value Score of B.
UBER’s P/E F12M Vs. Industry
Image Source: Zacks Investment Research
How to Play Uber Stock Post-Q3 Earnings?
Despite Uber’s weak stock performance, elevated debt burden and persistent macroeconomic pressures creating short-term headwinds, the long-term outlook for the ride-hailing leader remains encouraging.
The company’s emphasis on strategic diversification and shareholder-oriented initiatives continues to serve as a major strength. Uber remains well-positioned to navigate the current economic uncertainty. Uber’s diversification strategy — spanning acquisitions, international expansion and innovative service offerings — has played a vital role in reducing risks and reinforcing its competitive standing.
Overall, Uber’s large-scale operations, AV ambitions, strategic investments and diversification efforts create a strong platform for long-term growth. Maintaining positions in this Zacks Rank #3 (Hold) stock, despite the year-to-date price decline, appears to be a sensible approach at present, while potential investors may prefer to wait for a more attractive entry opportunity.
View the Zacks #1 Rank List
Image: Bigstock
How Should You Play UBER Stock After the Q3 Earnings Miss?
Key Takeaways
Last week, Uber Technologies (UBER - Free Report) reported lower-than-expected earnings per share, with high fuel costs from the Middle East conflict hurting the bottom line. The bottom line also contracted sharply year over year.
Revenues marginally beat the Zacks Consensus Estimate and also increased year over year, driven by gross bookings growth. Moreover, foreign exchange headwinds are likely to hurt fourth-quarter results.
Given this backdrop, let’s first review the third-quarter results.
UBER’s Q3 Earnings Snapshot
Earnings of 25 cents per share missed the Zacks Consensus Estimate of 94 cents. The figure declined 92% from $3.11 per share in the year-ago quarter. The earnings miss was the second one in the past four quarters, beating the mark on the other occasions. The average miss is 9.9%.
Uber Technologies Price and EPS Surprise
Uber Technologies price-eps-surprise | Uber Technologies Quote
Revenues increased 9.6% year over year to $14.77 billion and marginally surpassed the consensus estimate of $14.74 billion. Gross bookings increased 20% year over year to $59.82 billion, supported by higher trip volumes and expanding consumer engagement. However, a shortage of drivers and an uptick in fuel costs due to the Middle East conflict hurt results. The elevated fuel price impact in markets like Brazil and India meaningfully impacted the supply situation.
The Mobility segment fared below the company’s expectations, with segmental revenues declining 2% year over year on both a reported and constant-currency basis to $7.52 billion. Segmental results were hurt by driver supply failing to keep pace with strong consumer demand in several international markets.
The Delivery segment fared well, with segmental revenues increasing 23% year over year on both a reported and constant-currency basis to $5.49 billion. The segment benefited from expanding platform activity and continued growth in consumer demand.
FX Woes Likely to Hurt Uber’s Q4 Results
For the fourth quarter, Uber anticipates gross bookings between $63.25 billion and $65.25 billion. The guidance implies constant-currency growth of 18-22% year over year, with an anticipated currency headwind of approximately 1 percentage point to reported growth. The Zacks Consensus Estimate for this key metric is currently pegged at $64.28 billion.
Non-GAAP earnings are projected to be between 95 cents and 99 cents per share, representing year-over-year growth of 34-39%. Adjusted EBITDA is expected to be in the range of $3.13 billion to $3.23 billion.
Uber’s AV Ambitions Impress
In view of the rapidly expanding autonomous vehicle (“AV”) market, Uber is adopting a partnership-focused strategy to capitalize on emerging opportunities. By working alongside multiple technology leaders, the company has been able to avoid the substantial research and development costs associated with building in-house AV capabilities, while still progressing toward its automation ambitions.
Management expects approximately 700 fully driverless vehicles on its platform by the end of 2026 and more than 2,000 in 2027. Partnerships with the likes of Chinese companies WeRide (WRD - Free Report) and Baidu (BIDU - Free Report) have already ensured Uber’s presence in the driverless arena in many international markets.
In April, WeRide and Uber partnered to introduce fully driverless, fare-charging robotaxi services in Dubai. This initiative marks one of the earliest deployments of Level 4 autonomous vehicles for commercial use in the city and represents a significant milestone in their collaboration. This development aligns with the UAE’s broader smart mobility vision and strengthens WeRide’s partnership with the Roads and Transport Authority.
Baidu's Apollo powers Apollo Go robotaxis, with millions of rides and plans to expand beyond China. The company has developed one of the most extensive autonomous driving ecosystems through its Apollo platform, an open-source initiative launched in 2017 to accelerate innovation in self-driving technology across software, hardware and cloud services.
UBER’s Overall Price Performance Is Unimpressive
Uber’s shares have declined in double digits (% -wise) year to date, underperforming the Zacks Internet-Services industry over the same time frame.
YTD Price Comparison
Image Source: Zacks Investment Research
Valuation Picture
From a valuation perspective, Uber’s shares are cheaper compared with its industry on the basis of price/earnings (F12M). The company has a Value Score of B.
UBER’s P/E F12M Vs. Industry
How to Play Uber Stock Post-Q3 Earnings?
Despite Uber’s weak stock performance, elevated debt burden and persistent macroeconomic pressures creating short-term headwinds, the long-term outlook for the ride-hailing leader remains encouraging.
The company’s emphasis on strategic diversification and shareholder-oriented initiatives continues to serve as a major strength. Uber remains well-positioned to navigate the current economic uncertainty. Uber’s diversification strategy — spanning acquisitions, international expansion and innovative service offerings — has played a vital role in reducing risks and reinforcing its competitive standing.
Overall, Uber’s large-scale operations, AV ambitions, strategic investments and diversification efforts create a strong platform for long-term growth. Maintaining positions in this Zacks Rank #3 (Hold) stock, despite the year-to-date price decline, appears to be a sensible approach at present, while potential investors may prefer to wait for a more attractive entry opportunity.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.