Ride-hailing and food delivery giant Uber Technologies, Inc. (UBER) has been recovering from the pandemic, but it has yet to be profitable. I’m neutral on Uber stock. (See Insiders’ Hot Stocks on TipRanks)
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Recent Results
Last week, Uber company reported that gross bookings reached an all-time high of $23.1 billion, up 57% year-over-year. Still, it lost $2.4 billion, with $2.0 billion thanks to Uber’s equity investments revaluation.
The only bright spot in the report was an adjusted EBITDA of $8 million, with Mobility margins at 5.5% of gross bookings and Delivery getting closer to breakeven.
The company’s leadership hailed the results: “Our early and decisive investments in driver growth are still paying dividends, with drivers steadily returning to the platform, leading to further improvement in the consumer experience,” said Dara Khosrowshahi, CEO. “This is especially important as Mobility reignites. Mobility Gross Bookings are up 18% over just the last two months and this Halloween weekend surpassed 2019 levels.”
CFO Nelson Chai was on the same page, praising the company’s Delivery segment’s progress towards profitability: “While we recognize it’s just a step, reaching total-company Adjusted EBITDA profitability is an important milestone for Uber. Not only did our Mobility business recover to pre-COVID margins this quarter, our core restaurant delivery business was profitable on an Adjusted EBITDA basis for the first time as well, bringing the full Delivery segment close to breakeven.”
TipRanks’ Smart Score
TipRanks’s Smart Score rating system assigns Uber a Smart Score of 8 out 10, citing positive analyst, blogger, hedge fund, and news sentiment. This is contrasted by negative technicals, fundamentals, and very negative TipRanks investors sentiment.
Wall Street’s Take
Wall Street seems to share the enthusiasm of Uber’s management, even though Uber’s shares have lost 12% of their value year-to-date compared to a 25% gain for the S&P500 (SPY).
Uber has a Strong Buy consensus rating, based on 19 Buys and one Hold rating assigned in the past three months. The average Uber Technologies price target of $69.75 implies 55.4% upside potential. Price targets range from a high of $82 to a low of $50.
That’s an ambitious price target given the several headwinds the company continues to face, like the lingering of the pandemic, the threat of regulations in different states that it operates in, liability lawsuits, and competition from Lyft, as was discussed in a previous piece here.
Until these problems are addressed, Uber has a long drive to profitability.
Disclosure: At the time of publication, Panos Mourdoukoutas didn’t own shares of Uber.
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