Uber drops to near-record lows after Q1 results

Uber Technologies shares are losing ground today despite the release of solid earnings. Company is still recovering from the coronavirus pandemic that caused the stock to drop. The share price is approaching historical lows. Should investors really reconsider the company's situation?

• Revenue: 136% YoY increase to $6.85 billion ($6.13 billion expected)

• Loss per share: $0.18 vs. $0.24 expected

• EBITDA: $168 million, up from a $359 million loss in Q1 2021

Investors were spooked by the $5.9 billion net loss, which was primarily due to Uber's recent equity investments in Asian autonomous vehicle company Aurora, Chinese urban vehicle provider Didi and ride-hailing company Grab. However, Nelson Chai, company's CFO, claims  that Uber still has liquidity and can hold positions until a favorable moment to exit investments.

The company expects to generate positive cash flow for the full year 2022 which would mark a turning point in the company's financial history. According to management, gross bookings will be between $28.5 billion and $29.5 billion in the current quarter and EBITDA will be between $240 million and $270 million. CEO Dara Khosrowshahi said that gross bookings in April exceeded 2019 levels.

The company reported an increase in earnings from its freight business ($2.52 billion) versus delivery ($2.51 billion). Revenue in both business sectors grew 58% and 12% year-over-year, respectively. The company also reported an overall increase in the number of rides to 1.71 billion which is up 18% from Q1 2021. The number of Uber users also increased to 115 million which is an increase of 17%. Uber also expects the number of drivers to increase.

With rising fuel prices driving up labor costs, Uber will have to encourage drivers and suppliers to stay with the company which could involve a lot of expense. The effects of this have been felt today by Lyft shareholders as company's stock dropped more than 30%. Thus, the report and the current market situation shows that despite the growth in the popularity of the Uber platform and millions of new customers in the app, the company may struggle to deliver profit in the near future in the face of driver retention issues and investments that compounded the loss in the quarter. 

Uber UBER.US stock W1 interval. The stock price is currently near the 71.6 Fibonacci retracement support near $27. Breaking this important zone may accelerate the sell-off. In turn, a strong demand reaction may indicate a possible demand rebound and an attempt to break the downtrend by going above $35, where there is resistance from the previous local peak and valuations from 2020. Source:xStation5