Why Uber Stock Is Falling After Earnings
Uber stock is lower Wednesday as the ride-hailing firm's soft first-quarter outlook offsets its strong fourth-quarter results. Here's what you need to know.
Uber Technologies (UBER) stock fell out of the gate Wednesday after the ride-hailing company beat top- and bottom-line expectations for its fourth quarter but issued a weaker-than-expected gross bookings outlook for its first quarter.
In the three months ending December 31, Uber's revenue increased 20.4% year over year to $12 billion, driven by a 17.6% increase in gross bookings to $44.2 billion. Its earnings per share (EPS) rose nearly fourfold from the year-ago period to $3.21, largely due to a tax valuation release.
"Uber ended 2024 with our strongest quarter ever, as growth accelerated across MAPCs [Monthly Active Platform Consumers], trips, and Gross Bookings," said CEO Dara Khosrowshahi in a statement. "Our performance has been powered by rapid innovation and execution across multiple priorities, including the massive opportunity presented by autonomous vehicles."
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Khosrowshahi added that Uber entered the new year with "clear momentum" and that the company "will continue to be relentless against our long-term strategy."
"Record demand in both Mobility and Delivery helped us grow Gross Bookings faster than the high end of our guidance, and we closed out 2024 exceeding our three-year outlook for Gross Bookings, Adjusted EBITDA [earnings before interest, taxes, depreciation and amortization], and free cash flow," said Uber Chief Financial Officer Prashanth Mahendra-Rajah in a statement.
Uber's fourth-quarter results beat analysts' expectations. Wall Street was anticipating revenue of $11.8 billion, gross bookings of $43.5 billion and earnings of 50 cents per share, according to CNBC.
However, sentiment turned negative toward Uber stock when it provided its outlook. For the first quarter, Uber said it expects to achieve gross bookings in the range of $42 billion to $43.5 billion, representing growth of 17% to 21% from the year-ago period. The midpoint of this range, $42.75 billion, came up short of the $43.5 billion in gross bookings Wall Street is calling for.
Is Uber stock a buy, sell or hold?
Uber Technologies has lagged the broad market over the past 12 months, down roughly 6% vs the S&P 500's 21% gain. Yet, Wall Street is keeping the faith on the industrial stock.
According to S&P Global Market Intelligence, the average analyst target price for UBER stock is $88.63, representing implied upside of nearly 30% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm Jefferies is one of those with a Buy rating on the large-cap stock along with an $87 price target.
Jefferies analyst John Colantuoni admits there is "skepticism that UBER can deliver on the three-year outlook." However, he notes that the company "is keeping Bookings growth elevated by increasingly leveraging non-core products [Uber Freight, Uber for Business, for example] that address more use cases to drive user adoption and multi-product attachment."
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