Uber (UBER) Falls After Missing on Revenue Expectations, Analysts Lower PTs on Regulatory and Driver Supply Concerns

May 6, 2021 8:43 AM EDT
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Shares of Uber (NYSE: UBER) are down 4.2% in pre-open trading Thursday after the California-based company reported lower-than-expected Q1 revenues.

Uber posted a net loss of $0.06 per share, which is much better than the $0.54 per share expected loss. However, a large beat is a result of the $1.6 billion sale of its self-driving business ATG.

Sales were reported at $2.9 billion to miss on the $3.29 billion seen by analysts and sent shares lower in extended trading Wednesday. Uber Eats saw its sales explode 166% compared to a year ago, while the mobility business generated $6.77 billion from gross booking to mark a 38% decline vs Q1 2020.

“Uber is starting to fire on all cylinders, as more consumers are riding with us again while continuing to use our expanding delivery offerings. We will continue to innovate and find new ways to deepen engagement with our customers, as the only global platform that helps you go wherever you need and get whatever you want,” said Dara Khosrowshahi, CEO of the company.

Uber maintained its target to become profitable by the end of 2021. An adjusted EBITDA loss was reported at $359 million, which marks a $95 million improvement compared to Q4 2020.

“For the remainder of the year, I would remind you that delivery gross bookings year-over-year comparisons will become tougher as we continue to face significant forecasting uncertainty in predicting post-reopening consumer behavior,” Uber CFO Nelson Chai told analysts.

Uber said it has 3.5 million drivers and couriers to mark a jump of 4% quarter over quarter but down 22% compared to the year-ago period.

Wedbush analyst Daniel Ives lowered the price target to $66.00 per share from $76.00 on the Outperform-rated Uber citing regulatory concerns, and despite “a major recovery” in the mobility business.

Ives says that regulatory concerns have turned into a $10+ overhang on the stock.

“The elephant in the room is the regulatory environment which has thrown uncertainty into the employee vs. contractor debate with the latest moves coming out of the Biden Administration, a troubling scenario/overhang for the bulls. Also, Uber took a $600 million charge to its expenses in the March quarter based on the recent UK reclassification which highlights the complex and costly nature of these labor changes. In a nutshell, we remain bullish on Uber and believe this is a core recovery name to own for the next year as ridesharing rebounds and the delivery business finds a normalized growth rate,” the analyst wrote in a note.

Stifel analyst Scott Devitt has also moved lower on the PT front - now $65.00 from the prior $67.00 amid drivers supply concerns.

“Uber's ride demand continued to outpace supply and the company will be investing in building its driver base in 2Q. The company noted that the supply issue is most prevalent in the United States compared to the rest of the world, likely due to increased stimulus and unemployment benefits. As a result of the company's driver supply investments, Uber expects mobility take rates to decline sequentially to 20% and will improve thereafter in 2H:21. Uber noted that drivers are taking more rides and less delivery options as mobility demand returned, and expect mobility supply constraints to begin being lifted in 2H:21,” Devitt said in a research memo.

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