Uber races ahead on the fuel of its raised outlookUber gets a boost of over 11% to close at its highest price since July after the ride-hailing platform said that its third quarter bookings and adjusted earnings would be better than it originally thought. The company is now well on track to record its first profitable quarter – its total losses since it was founded in 2009 have come to over $22.1 billion so far, so investors are keen to see a profit. Uber now expects gross bookings of $22.8 billion and $23.2 million, and said that adjusted earnings will come in somewhere between a loss of $25 million and a profit of $25 million.
Prices ended the day at $44.36, up 11.5%.
Uber earnings buoyed by deliveriesShares of ride-sharing giant Uber popped over 6% in two days last week after reporting its second quarter earnings late on Wednesday, which beat estimates with a surprise profit but showed losses of over $500 million to its core business.
Shares of Uber spent the week in the red before seeing a turnaround on Thursday following its Q2 earnings report, which prompted a dip in price on Thursday morning before a jump of over 6% to see the week off. The platform reported earnings per share of $0.58 on revenue of $3.75 billion, easily beating expectations of $0.51 in losses per share and $3.93 billion in revenue. This quarter marks the first[ in over 13 quarters that Uber has reported a profit, and revenue was up over 105% from the same period the year before (which was mid-pandemic, to be fair).
The growing ride-sharing company brought in a net income of $1.1 billion in the quarter, largely thanks to large unrealized gains in Didi and Aurora – worth noting though that Didi’s share price has dropped nearly 40% in the last month, and Uber is bound to be affected. Though Uber is not at all immune to the effects of COVID, it has managed to lean on its Uber Eats segment to bolster the business, with its delivery business remaining strong despite the lifting of restrictions worldwide. All the Sunday night takeaways in the world aren’t enough to fight off the pandemic completely though, and its core business suffered a loss of $509 million in Q2. However, the company reaffirmed that it plans to reach EBITDA profitability by the end of the year
We successfully made large investments in Q2 to improve marketplace balance, and we are now well positioned to reach Adjusted EBITDA profitability by Q4. As we make progress towards that important milestone, we expect our Adjusted EBITDA loss in Q3 to improve to less than $100 million in addition to record Gross Bookings between $22 and $24 billion,
said CFO Nelson Chai.
Uber acquisition beefs up freight statusThe pandemic has taken its toll on Uber’s traditional business segments, so its latest $2.25 billion acquisition of trucking logistics company Transplace is aimed at beefing up its Uber Freight division.
Uber is best known for its ride-hailing services and food delivery segment, but it’s been giving some TLC to its Freight business in an effort to concentrate on those areas of the business that are seeing growth in the post-pandemic world. Uber Freight, the trucking division of Uber, will acquire shipping software company Transplace for a cool $2.25 billion from private equity firm TPG Capital, a move which is geared towards speeding up Uber Freight’s path to profitability. Uber Freight is essentially a middle-man between long-haul trucking and shippers, and Transplace will bring its relationships with shipping brokers and carriers to cover supply chain and logistics management.
Uber’s ride-sharing business has taken a hit during the pandemic, and though Uber Eats is many people’s go to for a night in, competition is sneaking in slowly but surely and making the food delivery market a tough one to dominate. As a way to bulk up its operations, Uber has started expanding its delivery options in the trucking business, hoping to bring in a more efficient digital bookings system to the domestic shipping sector. Though competition in the trucking space is nearly as competitive, this deal will make Uber Freight the eighth-largest third-party logistics company in the country.
This is a significant step forward, not just for Uber Freight but for the entire logistics ecosystem. This is an opportunity to bring together complementary best-in-class technology solutions and operational excellence from two premier companies to create an industry-first shipper-to-carrier platform that will transform shippers' entire supply chains, delivering operational resilience and reducing costs at a time when it matters most.
said Lior Ron, head of Uber Freight.
Uber driver stimulusUber announces a $250 million stimulus plan to try and entice new drivers, and prices sink 2%.
Uber’s one-time stimulus is aimed at not only getting drivers back on the road, but recruiting new drivers to the company – pretty crucial, given the bad press the firm has gotten in recent years about its treatment of employees, not to mention the numerous court cases it’s been fighting on how to classify (and pay) its drivers. Right now, the number of drivers is currently down around 40% from the same period in 2020 – although that’s obviously got a lot to do with Covid as well, which decimated the taxi industry. When the CARES Act was extended towards the end of 2020 and gig workers won unemployment assistance, a lot of drivers decided to hang up their keys.
Uber lost over $968 million in the first few months of 2021, with adjusted net revenues down 16%, and only 5 billion trips in 2020 compared to 7 billion the year before. Uber isn't the only company struggling, and competitor Lyft is facing a driver shortage too. The ride-sharing app lost $458.2 million in the last quarter over this past quarter, with adjusted net revenues down an astonishing 44%; although it has predicted that investments to boost driver supply can be expected to create Q1 revenue of up to $20 million.
The thing is, that with over 25% of the U.S. now vaccinated, Uber is finding that there are more trip requests than drivers around to give them. States are also beginning to ease pandemic restrictions and roll out vaccines, so it’s starting to look like a good time to be an Uber driver.