Uber stock has accelerated to nearly double its value this year. Can third-quarter earnings keep the company in the fast lane?
The San Francisco-based Uber will report earnings before the market opens on Tuesday. The previous quarter was Uber's first ever with an operating profit.
For the third quarter ending Sept. 30, analysts expect Uber to post earnings of 7 cents per share on sales of $9.54 billion, according to FactSet. In the same quarter last year, Uber lost 61 cents per share on $8.34 billion in revenue.
Uber stock has gained just under 90% this year. On the stock market today, Uber shares were trading up by a fraction at 47.81.
Here's what to watch for in the company's upcoming report:
Uber Stock: International Growth
Uber's revenue rose 14% in the second quarter, the fifth quarter in a row of decelerating sales growth.
Starting with the first quarter of 2022, here are the figures for Uber's year-over-year quarterly sales growth: 136.1%, 105.5%, 72%, 49%, 28.7% and 14.3%.
Uber's eye-popping growth in 2022 followed a slump in 2021, when the pandemic was still sapping demand for its ride-share business.
The company's shares fell following its second-quarter report because revenue missed analyst targets. If Uber's revenue comes in as analysts expect, the growth rate for the third quarter would be roughly in line with the second quarter at 14%.
Wall Street will likely focus on Uber's international operations. While Uber still collects a little more than half its revenue in North America, international markets have powered recent sales growth.
For the June quarter, sales in the U.S. and Canada climbed 4% year over year to $5.13 billion. Meanwhile, Uber's revenue climbed 31% to $2.41 billion in Europe, the Middle East, and Africa; by 31% to $1.06 billion in the Asia-Pacific region; and by 30% to $627 million in Latin America.
Uber Stock: New Revenue Sources
It has been roughly a year since Uber launched its advertising sales division, led by former Amazon ad executive Mark Grether.
Chief Executive Dara Khosrowshahi said on the company's last earnings call that the business is on track to exceed a $1 billion sales target for 2024. Analysts will be listening for an update on progress for that business.
KeyBanc Capital Markets analyst Justin Patterson last week upgraded Uber stock to a buy rating.
"Uber is positioned to benefit from the sector growth of retail media with its emerging advertising business, which is margin accretive," Patterson wrote in the client note.
Further, he wrote, "we continue to see opportunity for Uber to expand within its existing verticals into areas like hailables, shared rides, and grocery delivery."
Eats vs Rides
The Uber Eats food delivery business provided a lifeline for the company during the early months of the pandemic. Delivery sales topped those from the flagship ride-sharing business for the first time in the second quarter of 2020.
But the company's ride-sharing business has been stronger in recent quarters. Sales jumped 38% for the division during the second quarter to $4.89 billion. Delivery revenue, which also includes grocery items, rose 14% year over year to $3.05 billion.
Uber is expected to post a 26% year-over-year increase in Rides bookings, to $17.34 billion, according to FactSet. Eats bookings are expected to rise 16.2% year over year to $15.90 billion.
Something to watch: App data intelligence company Apptopia recently launched an updated index measuring Eats and Rides activity separately across Uber's apps for North American users. Apptopia expects Rides and Eats bookings to grow at a similar rate quarter over quarter, whereas market consensus sees Rides bookings growing faster.
Data on Uber app activity is pointing to "softer sequential growth in bookings in North America," with the year-over-year growth still strong, Apptopia VP of Research Tom Grant told Investor's Business Daily.
Competition With Lyft
While Uber stock has gained big this year, ride-hailing rival Lyft has stumbled. Lyft stock is down about 3% on the year as of market open Monday.
Lyft reports earnings after close of trading Wednesday. Analysts expect Lyft to post adjusted earnings of 15 cents per share on sales of $1.2 billion.
Under new Chief Executive David Risher, Lyft has cut costs and lowered fares in a bid to catch up to Uber. Analysts will be listening for commentary from Uber on whether it has had to adjust prices in response.
Uber Technical Ratings
Meanwhile, Uber shares hold an IBD Composite Rating of 86 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one. The best growth stocks have a Composite Rating of 90 or better.
Also, Uber stock has an Accumulation/Distribution Rating of B-. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling.
