Uber Stock Fell Due to Lower Q2 Results

Uber (UBER) reported lower-than-expected second-quarter results despite improving market conditions. Uber’s revenues grew 14% to $3.17 billion in the second quarter. The company significantly lagged analysts’ forecast of $3.36 billion. Uber stock fell 6.2% in the after-market hours due to its dismal performance. The stock rose 8.2% in the regular trading session on Thursday. Lyft (LYFT) reported strong revenue growth and indicated an improved industry environment. Lyft’s revenues grew 72% to $867.3 million. As of 11:02 AM ET on Friday, Uber stock has fallen 7.2%, while Lyft stock has fallen 2.2%.

Uber’s second-quarter revenue growth rate reflected a slowdown compared to its 20% growth in the first quarter. Also, the company reported higher-than-expected losses. Uber’s loss per share widened to $4.72 in the second quarter compared to a loss per share of $2.01 in the second quarter of 2018. The losses mainly increased due to $3.9 billion of stock-based compensation expenses. Analysts expected an adjusted loss per share of $3.12.

The adjusted EBITDA loss worsened to $656 million in the second quarter compared to a loss of $292 million in the second quarter of 2018. The company’s earnings were dragged down by investments to expand and strengthen the growing business.

Key insights from Uber’s results

Uber’s second-quarter revenue growth slowed down due to weak sales growth in its core ride-sharing business. The ride-sharing revenues rose 2% to $2.35 billion. Uber Eats’ revenues rose 72% to $595 million. The two businesses had slower second-quarter revenue growth compared to the first quarter. Ridesharing and Uber Eats’ revenues rose 9% and 89%, respectively, in the first quarter. The slower ridesharing revenues disappointed investors. The price war has eased between Uber and Lyft.

Currency fluctuations and a $298 million driver appreciation award associated with the company’s IPO had a negative impact on the top-line growth in the second quarter. The company generated adjusted revenue growth of 26%. The adjusted revenue growth excludes the impact of currency fluctuations and the driver appreciation award.

Uber’s gross bookings rose 31% in the second quarter to $15.76 billion. The gross bookings fell short of analysts’ forecast of $15.80 billion. Currency headwinds had a 6% negative impact on the company’s gross bookings. The monthly active users rose 30% to 99 million.

Outlook

Uber expects its gross bookings to rise 31%–35% on a constant currency basis to $65 billion–$67 billion in 2019. The company expects its 2019 adjusted EBITDA loss to be $3.0 billion–$3.2 billion. To strengthen the business and ensure more expansion, the company will continue to invest in the Uber Eats business, Other Bets, Advanced Technologies Group, and its infrastructure.

The company is taking various steps to improve its efficiency and reduce costs. Uber removed 400 marketing personnel to lower its costs. According to CNBC, CEO Dara Khosrowshahi indicated in an interview that 2019 would be its peak investment year. He said that losses will come down in the next two years.