Uber Q2 earnings preview: another quarterly loss expected

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After a successful first quarter report, why is Uber expected to deliver another quarterly loss?

Source: Bloomberg

 

Shares Uber Earnings before interest, taxes, depreciation and amortization Revenue Ridesharing company Interest rates

Hebe Chen | Market Analyst, Melbourne | Publication date: Friday 29 July 2022 

When is Uber’s earnings date?

Uber Technologies (UBER) will issue its second quarterly earnings report before the market opens on Tuesday, August 2nd.

Uber Q2, 2022 earnings: What to expect?

Uber Technologies is expected to deliver another loss in earnings for the second quarter in a row even though its revenue is set to move 87% higher from a year ago.

This ride-hailing company is expected to post a quarterly loss of $0.05 per share during the year's second quarter while its quarterly revenues are expected to be $7.35 billion, jumping 7% from $6.85 billion in the previous quarter.

What is Uber's key challenge?

In the first quarter's earnings report, Uber was pleased to announce the company had recovered from its pandemic lows and wouldn't have to put up 'significant' investments to keep drivers on the platform. However, the business still reported a $5.9 billion loss during the year's first three months and did not forecast a profitable quarter for the upcoming report.

For the second quarter, Uber anticipated gross bookings of between $28.5 billion and $29.5 billion. the EBITDA (earnings before interest, taxes, depreciation, and amortization) assumption is to be between $240 million and $270 million.

On the positive side, Uber's mobility revenue has now surpassed the delivery revenue that the business relied on throughout the pandemic. The segment has earned an encouraging 58% increase in revenue over the year and its monthly active platform consumers have reached 115 million, up 17% yearly. Both trends are anticipated to continue to deliver the upside for the second quarter.

However, rising costs are a prominent challenge for Uber now.

Uber's driver-intensive business model has struggled with supply and demand since the Covid-19 pandemic took drivers off the road. As a result, Uber had to rely on incentives to bring drivers back which ate into its financials. In addition, the historically low unemployment rate across many regions is only making the labour shortage issue even worse.

In addition to that is the fuel price, the war in Ukraine has caused significant hikes in fuel prices thus making drivers even more reluctant to operate to their full capacity. To keep their drivers, the company would have to pour millions of dollars worth of incentives which would risk further deteriorating Uber's profitability.

Source: MarketBeat

Uber share price: technical analysis

Uber’s share price has fallen more than 45% from January. In July, its price recorded a new low since March 2020 and on the weekly chart, it is clear that the price is sliding along with the descending trajectory which was formed last September. The lower boundary, where the price is moving closer too should be viewed as mid-term support.

From the daily chart, it looks like the price has recently failed to break through the key resistance at $24.20 while the support from the 20-day SMA is now in focus.

The current bear-biased momentum looks likely to stay intact as the RSI suggests to paint another lower high to glue the share price into its downward-moving tunnel.

Weekly chart

Source: IG

Daily chart

Source: IG