Stock of the week - Uber Technologies (10.02.2022)

• Uber reported Q4 2021 results yesterday

• Revenue and EPS beat expectations

• Delivery segment outperforms core Mobility segment

• Company is optimistic about Q1 2022

• Rival Lyft struggles with driver shortage

• Stock trades in a descending wedge pattern

Uber is trading over 5% higher in today's pre-market session. Company released an upbeat earnings report for Q4 2021 yesterday after the close of the Wall Street session. Investors were not only positively surprised by headline results but also by outlook for the first quarter of 2022. Let's take a closer look at the latest financial report from Uber Technologies.

Better-than-expected Q4 results

Uber Technologies reported earnings for Q4 2021 yesterday after the close of the Wall Street session. Results of the company beat market's expectations, thanks to strong performance of a Delivery segment. Revenue as well as booking in the Delivery segment exceeded the company's core Mobility business in the final quarter of 2021. Company reported a net profit of $892 million. However, this included a $1.4 billion pretax gain on equity investment. After adjusting earnings for this one-off factor, the company's earnings per share turned out to be negative $0.26. Expansion into the food delivery business pays off as it helps the company smooth out loss of revenue in the Mobility segment. However, Uber said that as the most recent wave of pandemic starts to recede, the company sees improvement in its Mobility business.

Q4 2021 results

• Revenue: $5.78 billion vs $5.34 billion expected

• Adjusted EPS: -$0.26 vs -$0.35 expected

• Adjusted EBITDA: $86 million

• Mobility Gross Bookings: $11.3 billion, up 67% YoY

• Delivery Gross Bookings: $13.4 billion, up 34% YoY

• Mobility revenue: $2.28 billion

• Delivery revenue: $2.42 billion

• Freight revenue: $1.08 billion

• Trips during the quarter: 1.77 billion, up 8% YoY

• Monthly active platform users: 118 million, up 8% YoY

Business improves after Omicron surge

Uber said that its business continues to improve with demand for its Mobility services increasing as life returns to normal. While Omicron took a toll on Mobility demand in December, Uber's CEO said that bookings are around 25% MoM higher in recent months. Meanwhile, the deliveries business that experienced a boom during the pandemic continues to hold up well. Uber projects gross bookings in the current quarter to be slightly higher than in Q4 2021 ($24.7 billion). Adjusted EBITDA is also expected to be higher. Company's executives said that ultrafast delivery is a field worth exploring but Uber is currently focused on new partnerships.

Q1 2022 forecasts

• Gross booking: $25-26 billion

• Adjusted EBITDA: $100-130 million

Uber vs Lyft

Lyft (LYFT.US), Uber's biggest rival in the United States, reported Q4 results on Tuesday. Just like Uber, Lyft managed to bear revenue and earnings estimates. However, Lyft warned that it struggles with fewer number of riders compared to previous quarters and that Omicron continues to weigh on its business in the first quarter of 2022. Nevertheless, just like Uber, Lyft also is optimistic about full-2022.

A look at the chart

Taking a look at Uber Technologies (UBER.US) chart at D1 interval, we can see that the stock has been trading in a descending wedge pattern for around a year. Share price bounced off the lower limit of the pattern at the turn of January and February. Stock has gained around 20% since the beginning of the month and is trading another 5% higher in today's pre-market. It looks like a test of the upper limit of the aforementioned wedge pattern will be made at the start of today's trading. If bulls manage to break through, the next resistance level to watch can be found at $43.25 and is marked with the upper limit of the Overbalance structure.

Source: xStation5