Uber (UBER) shares are giving long investors the reaction they wanted: a nice upside pop after the ride-share company reported earnings.
The shares are higher by roughly 17% on Tuesday, with the stock hitting its highest level since early May. The company doubled revenue year over year and beat analysts’ expectations as strong travel trends continue to fuel its top-line results.
Trips came in at 1.87 billion, jup 24% year over year and 9% sequentially.
Travel trends have picked up considerably around the world this year, as many people are finally able to travel with fewer restrictions and more options. While that’s wreaking havoc on airports, it’s helping companies like Uber find some momentum.
Lyft (LYFT) stock is also benefiting from Uber’s report, with its shares up more than 15% on the day. Lyft will report its quarterly results on Thursday.
While the recent travel trends have boded well for Uber stock — it's up 44% from last month’s low — the shares are still down more than 40% so far this year and 55% from the all-time highs.
Trading Uber Stock
Chart courtesy of TrendSpider.com
If Uber stock can finish higher this week, that'd be its third straight weekly gain. Notable, though, is that despite the last two weekly rallies, the shares have not been able to close above the 10-week moving average.
With today’s rally, Uber is trading above the 10-week and the 21-week moving averages.
Although that’s a bullish development, the shares are trading into a key area. Specifically, that’s the key $28.50 area and downtrend resistance (blue line).
Admittedly, the latter is a bit arbitrary and, in my opinion, does not carry as much weight as the $28.50 zone. Note how this level was support in Q2 and Q3 of 2020, as well as major support in Q1 2022 before it failed in May.
If the stock can reclaim this level and stay above it, it opens the door up to the $31 level. There Uber stock finds the 38.2% retracement and the 10-month moving average. If it can eventually push through that, then $35 could be next.
There the stock finds its 50-week moving average and 50% retracement.
What happens if Uber stock can’t push higher and is instead rejected? Then the $25 level and the 10-week moving average are in play.
Bulls will want to see this zone act as support in this situation because a break below it could put $20 back in play.
The bottom line: Above $28.50 is constructive, but below this measure and traders should remain on their toes.
