Uber’s revenue doubles, but stocks fall after Lyft warns of higher ride costs
revenue more than doubled in the last quarter as demand for rides rebounded from the slowdown caused by the Covid-19 outbreak late last year and the company’s food delivery increased despite the reopening of restaurants.
Uber issued a bullish outlook for the current quarter, but its shares fell about 5% on Wednesday, triggered in part by rival Lyft Inc.
results a day earlier.
Lyft spooked investors with a weaker-than-expected adjusted earnings forecast on Tuesday. Its stock was down more than 35% at one point on Wednesday, its biggest intraday percentage drop since its IPO in 2019. It closed down 30%. The company said it will spend more to motivate drivers to return to its platform and those costs will weigh on its results in the current quarter.
Uber and Lyft have been grappling with a year-long driver shortage, which has driven up prices for rides.
Uber said Wednesday that its driver base is at a post-pandemic level and that it doesn’t need to spend a lot to increase supply. Many rideshare drivers have switched to food delivery during the pandemic. Uber said that because it has a food delivery business, it was in a better position to entice drivers to switch back to transporting customers. Lyft does not have a delivery arm.
Uber had previously timed its earnings announcement after the market closed on Wednesday, but moved it before the market opened, fearing its shares could be caught in a selloff triggered by Lyft’s post.
Shares of both companies have underperformed this year on fears that rising gasoline prices, labor shortages and new variants of Covid-19 could weigh on their growth. Uber and Lyft shares are down about 30% this year through Tuesday’s close, against a 20% decline in the Nasdaq composite index.
For the three months through March, Uber said revenue more than doubled from a year earlier to $6.85 billion. Analysts polled by FactSet expected revenue of $6.09 billion. Revenues were also helped by high fares.
Uber said growth is expected to continue this quarter. He said the value of rides booked in April exceeded 2019 levels and he expects the total value of bookings in the current quarter to be between $28.5 billion and $29.5 billion. billions of dollars. Wall Street expected $28.39 billion worth of bookings for the quarter ending in June.
Uber expects adjusted earnings before interest, taxes, depreciation and amortization of between $240 million and $270 million for the current quarter, compared to an average Wall Street estimate of $246 million.
Uber and Lyft released their first quarterly earnings by this adjusted measure last year and said it signaled the strength of their underlying operations. This measure eliminates expenses such as depreciation, income taxes and stock-based compensation.
Neither company saw a net profit from the strength of its operations, although Uber saw rare net profits from its investments in other companies.
Uber’s first-quarter net loss widened to $5.93 billion from $108 million a year earlier. The loss comes from its stakes in Chinese carpooling giant Didi Global Inc.,
Southeast Asian Possessions Inc.
and Aurora Innovation Inc.
The loss was larger than the $494 million expected by analysts. Uber’s adjusted profit of $168 million for the latest quarter beat Wall Street forecasts. The company said it expects full-year cash flow to be positive this year.
Passengers return to Uber and Lyft faster than drivers. Labor shortages pushed ride prices to record highs last year. Ride prices have started to fall from last summer’s highs but have started to climb again this year, according to market research firm YipitData. Companies imposed small fuel surcharges on passengers to offset the pain of rising gas prices, which affected average prices, YipitData said.
Uber said Wednesday that wait times for passengers and “peak trips,” which trigger when drivers are in short supply, were at their best in a year during the first quarter.
Uber saw record food delivery bookings in the first quarter, showing the resilience of the business even as restaurants reopened. Uber Eats has become larger than Uber’s core rides business during the pandemic and unit bookings have continued to outpace rides. While delivery bookings rose 12% from a year earlier to $13.9 billion in the quarter, the growth rate fell sharply after nearly tripling a year ago.
Uber agreed to a landmark deal in March to list all New York taxis on its app later this spring. The ride-sharing and food delivery company also passed a regulatory milestone in Washington state the same month. The state passed a law preserving the company’s independent contractor work model. Uber, Lyft and other companies that rely on so-called construction workers have battled regulators across the country over whether their drivers should be classified as employees or independent contractors.
The companies spent more than $200 million on a 2020 ballot measure to overturn a California law that required them to classify drivers as employees. After California’s victory, Uber and others said they would lobby lawmakers in other states to preserve their gig worker model.
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