Quiver Quantitative - Uber Technologies (NYSE:UBER) (UBER) posted a surprising first-quarter net loss and issued a weaker-than-expected forecast for its second-quarter gross bookings, causing its shares to tumble by 6% before the market opened. Despite dominating the U.S. ride-share market and food delivery business in 2023, posting its first annual profit that year, Uber reported a net loss of $654 million for the quarter, primarily due to legal charges and provisions and the fair valuation of certain company investments. Analysts had expected a net profit of $503.1 million. Additionally, Uber missed Wall Street expectations for quarterly gross bookings, a critical metric that reflects the total value of transactions on the platform.
Prashanth Mahendra-Rajah, Uber's CFO, attributed the gross booking miss to softer ride-share demand in Latin America and the impact of shifting holidays. "We were already expecting a deceleration in average spending in several markets due to slower-than-expected economic activity in the U.S. in Q1 and persistent consumer pressures. However, this is way above the base case," said Thomas Monteiro, a senior analyst at Investing.com. Uber forecasted its second-quarter gross bookings between $38.75 billion and $40.25 billion, falling short of analysts' expectations of $40.04 billion.
Market Overview: -Uber reports a surprise net loss in Q1 and forecasts lower-than-expected gross bookings for Q2, causing a stock price drop.
Key Points: -The loss comes despite a strong 2023 with U.S. market dominance and first-year profitability. -Legal fees and softer demand in Latin America contribute to the negative performance. -Uber's larger market share is overshadowed by missed estimates and a cautious Q2 outlook.
Looking Ahead: -Concerns rise about Uber's growth trajectory after exceeding expectations in 2023. -Rival Lyft (LYFT) shines in contrast with positive results and a bullish Q2 forecast. -Uber needs to address potential economic slowdown and user engagement to regain investor confidence.
In contrast, smaller rival posted better-than-expected results and predicted a strong second quarter, citing an industry-wide uptick in ride-share demand. Lyft, which primarily operates in the U.S. and Canada, has been gaining market share from Uber since hiring David Risher as CEO in April. By cutting costs aggressively, Risher has shortened wait times and offered competitive fares, boosting Lyft's user base. Uber, operating in about 70 countries and providing services including freight booking, had a 72% share of the U.S. ride-hailing market in the March quarter, up from 68% two years ago.
Uber's first-quarter gross bookings came in at $37.65 billion, narrowly missing expectations of $37.92 billion. While revenue rose 15% to $10.13 billion, slightly surpassing the estimate of $10.11 billion, Uber lost 32 cents per share on an adjusted basis, falling far short of expectations for a 23-cent profit.
This article was originally published on Quiver Quantitative