Uber Shares Slump in After-Hours as Earnings Miss Estimates But Eats Business Reduce Losses

Uber Technologies’ shares fell about 5% in extended trading on Wednesday after the ride-sharing company missed Wall Street expectations on revenue and profit in the fourth quarter of 2020; however, it managed to post narrower loss due to its growing food delivery business amid the COVID-19 pandemic.

San Francisco-based Uber Technologies reported a quarterly adjusted loss of $0.54 per share, slightly missing the market consensus estimate for a loss of $0.53 per share. The company’s revenue declined more than 20% to $3.17 billion from the same period a year ago​, missing the Wall Street estimates of $3.58 billion.

Uber reported mixed fourth-quarter results as the firm missed top-line expectations but beat FactSet consensus estimates on the bottom-line. Delivery net revenue growth accelerated again while the decline in mobility revenues lowed for the second consecutive quarter. While the firm awaits a post-pandemic world which likely will return its mobility segment back to growth, that business remains profitable on an adjusted EBITDA basis,” said Ali Mogharabi, senior equity analyst at Morningstar.

“On the delivery segment side, we think Uber’s various acquisitions, which will help the firm provide on-demand delivery service for products beyond meals, are strengthening its network effect and should drive further progress toward profitability. We have slightly increased our projections and rolled our model forward, increasing our fair value estimate to $67 from $61. While the stock is trading at a discount to our fair value estimate, we recommend new investors wait for a wider margin of safety before allocating capital to this narrow-moat name.”

Uber shares, which surged over 70% in 2020, fell about 5% to $60.14 in extended trading on Wednesday.

Uber Stock Price Forecast

Twenty-one analysts who offered stock ratings for Uber in the last three months forecast the average price in 12 months $63.76 with a high forecast of $80.00 and a low forecast of $50.00.

The average price target represents a 0.92% increase from the last price of $63.18. All those 21 analysts rated “Buy”, according to Tipranks.

Morgan Stanley gave a base target price of $68 with a high of $85 under a bull scenario and $35 under the worst-case scenario. The firm currently has an “Overweight” rating on the ride-sharing company’s stock.

Several other analysts have also recently commented on the stock. BTIG raised the price target to $80 from $70. Keybanc upped the price objective to $75 from $63. Canaccord Genuity increased the price target to $75 from $65. Uber Technologies had its target price increased by analysts at KeyCorp to $63 from $60. The firm presently has an “overweight” rating.

In addition, Cowen raised their target price to $64 from $58 and gave the stock an “outperform” rating. Needham & Company LLC raised their target price to $60 from $50 and gave the stock a “buy” rating. Loop Capital raised their target price to $59 from $40.

Analyst Comments

Uber is a truly global platform with multiple large addressable markets. We see a path forward for both ridesharing and Eats bookings growth, primarily driven by MAPC and frequency growth. We forecast fairly flat ridesharing ANR take rates (albeit on a growing gross booking base) and significant growth in Eats ANR take rate, driven principally by order velocity and positive restaurant mix,” said Brian Nowak, equity analyst at Morgan Stanley.

Uber‘s scale and liquidity gives drivers higher earnings power and riders lower wait times. Uber‘s platform approach allows it to rapidly expand into new business lines (Eats, Freight) and leverage shared expenses.”

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