We recently issued an updated report on Uber Technologies, Inc. (UBER - Free Report) .
The coronavirus crisis is an obstacle to the company’s goal to generate profits (on an adjusted basis) this year. The significant impact of coronavirus on Uber’s rides business is evident from the 5% year-over-year decline in gross bookings from rides in first-quarter 2020. This was the first time ever that gross bookings from rides declined. Also, the company’s rides bookings decline 80% in April.
Total costs and expenses increased 16.3% year over year in the first quarter despite a 14.9% decline in sales and marketing expenses, which affected the bottom line.
With coronavirus-led restrictions being gradually lifted, Uber’s rides business is witnessing improvement. The business is currently down 70% year over year, better than the 80% fall in April. The company has been seeing week-over-week increase in rides for a while now. Considering the health crisis, Uber announced a financial assistance program for drivers and delivery people during the first quarter.
Uber's efforts to expand its presence across the globe are impressive. The market for driverless or self-driving cars is gaining prominence and Uber aims to become a key player in this space. Additionally, with focus on financial discipline, the company has lowered its adjusted EBITDA losses in the past few quarters. During first-quarter 2020, adjusted EBITDA loss narrowed $257 million on a year-over-year basis. Losses are expected to keep declining in the subsequent quarters.
In a bid to trim losses, Uber sold its online food-ordering business in India to Zomato in January. The unit had performed dismally ever since its launch in India in 2017. In May 2020, the company terminated its unprofitable Uber Eats services in the Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Uruguay and Ukraine. This will enable the company focus on areas that have a high growth potential.
Zacks Rank & Key Picks
Uber carries a Zacks Rank #3 (Hold).
Some other better-ranked stocks in the Zacks Computer and Technology sector are Acacia Communications, Inc. (ACIA - Free Report) , ASGN Incorporated (ASGN - Free Report) and Chegg, Inc. (CHGG - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings (three to five years) growth rate for Acacia Communications, ASGN Incorporated and Chegg is estimated at 30%, 5.6% and 30%, respectively.
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