Uber Technologies (UBER) rallied to a 2-year high today and has nearly doubled in price since the beginning of the year. Uber has outperformed rival Lyft (LYFT) and the S&P 500 ($SPX) (SPY) this year, raising the bar for its Q2 earnings results on Tuesday. According to Bloomberg data, 90% of the analysts that cover Uber rate the stock a buy, more than any other large-cap internet media and services company, so any disappointment in earnings could take the air out of the recent rally.
Analysts and investors will look to Uber’s earnings results to see if the company is weathering concerns about slowing consumer spending and rising prices. According to Jeffries, Uber has captured about 15% of the $1 billion rideshare market in the U.S., compared to only 6% for Lyft, and investors want to see the company “keep the momentum going on the fundamental side.”
A significant data point in Tuesday’s Q2 earnings report will be whether Uber is near GAAP net income profitability on a quarterly and trailing 12-month basis, the last hurdle the company needs to overcome to be eligible for inclusion in the S&P 500 Stock Index. BTIG estimates Uber could reach S&P inclusion at the end of this year, while Sanford C. Bernstein predicts Q2 of 2024. Bernstein also believes “the company is poised to deliver on improving profitability, capital discipline and healthy growth” and that “index inclusion can be the cherry on top.“
Uber’s investment in long-term growth offerings such as Uber Eats, mobility, freight, and its teen-rides program and member deals are seen as setting it apart from rival Lyft. Uber is trying to boost revenue by expanding its ridesharing into the teen market. According to the latest statistics from the Federal Highway Administration, only 25.6% of 16-year-olds had a driver’s license in 2022, down from 47.8% in 1984. Uber is also looking to develop a “super app” that will combine all its services into one app.
Despite an uncertain economic outlook, Uber is thriving as consumers continue to spend more on rides and food takeout, even as spending in retail and other areas suffers. Uber CEO Khosrowshahi said he does not see “any kind of a signal of a slowdown” in consumer habits.
Also, Zacks Investment Management said Uber has ways to “generate revenue that Lyft does not, and Uber Eats is one of the bigger contributors to that topline revenue growth. Uber has done a good job of branding itself as a technology company, whereas Lyft is just a rideshare.”
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
