uploads/2020/02/Uber-stock1.jpg

Uber Stock: 3 Things to Know This Week

By

Updated

Uber Technologies (NYSE:UBER) stock will be on many investors’ radar this week. The market continues to digest the company’s fourth-quarter report. On February 7, Uber stock rose 9.54%—its biggest single-day gain since its IPO in May.

Here are the three things to know about Uber at the beginning of this week.

Article continues below advertisement

Uber stock rose due to strong Q4 performance

Uber released its fourth-quarter results after the market close on February 6. The company reported revenue of about $4.1 billion, which rose 37% YoY (year-over-year) and exceeded the consensus estimate by about $11 million. Notably, Uber’s revenue growth accelerated from 30% in the second quarter.

Although Uber continues to make losses, the company’s loss is narrowing. The company posted a negative EPS of $0.64, which was better than the negative EPS of $0.68 that Wall Street expected. Also, the amount was a huge improvement from a negative EPS of $1.98 a year ago.

The impressive earnings results lifted Uber and Lyft (NASDAQ:LYFT) stock. Shares of Lyft rose 5.27% on February 7 to record the biggest gain so far in 2020. Due to Uber’s impressive results, investors see positive signs for ride-hailing businesses.

Ride-hailing business is profitable

Uber’s core ride-hailing business was profitable in the fourth quarter. However, the company ended up reporting a companywide loss for the quarter due to overwhelming losses in its side businesses like its food delivery unit UberEats.

However, Uber is taking steps to control the losses, particularly in its side businesses, as profitability becomes a priority. Last month, the company sold its loss-making UberEats unit in India to Zomato. Now, the company owns a stake in Zomato. The stake allows Uber to continue participating in India’s promising food delivery market but without the heavy burden. Uber stock rose by more than 7.0% after the company announced the arrangement with Zomato.

Also, Uber is pulling out of tough food delivery markets, like South Korea, in a bid to control costs.

The company is targeting a profit in the fourth quarter of 2020. Previously, Uber expected a profit in 2021 at the earliest.

Uber is engaging authorities on regulatory issues

Lately, Uber has faced multiple regulatory headwinds around the world. For example, London authorities declined to renew the company’s license last year. A German court also issued a ban on Uber’s ride-hailing service in the country last year. In January, Uber shut its business in Colombia amid accusations of unfair competition.

However, Uber wants to achieve a stable regulatory environment for its business. During the earnings call, CEO Dara Khosrowshahi talked about Uber’s engagement with authorities around the world to improve the regulatory environment.

On February 7, the increase pushed Uber stock to a 36.6% gain YTD (year-to-date). So far, Lyft stock has gained 16% YTD.

Advertisement

More From Market Realist