As a result of the broad rally in equities in response to the outcome of the US presidential elections, shares in US technology company Uber, have exploded higher in recent days. Indeed, the rally in Uber’s stock price has come despite the latest set of earnings that undershot expectations.
Earnings & Revenues Miss
Uber reported third-quarter earnings per share last week of -$0.62. This surpassed expectations for a -$0.61 reading. Revenues were also a little worse than expected at $3.13 billion over the quarter, missing expectations for a $3.20 billion result.
Overall, the company noted a $1.09 billion loss over the quarter on a GAAP basis. This was an improvement on the prior year when the company reported a $1.16 billion loss.
Looking at the breakdown of Uber’s business, the company reported mobility adjusted revenues (including Uber’s primary Ride business) of $1.37 billion over the quarter. This marks a 52% decline year on year.
The adjusted net revenues for the firm’s Delivery business, however, grew by 190% year on year to $1.14 billion. Uber accredits this growth to the explosion in delivery demand amidst lockdowns and social distancing restrictions.
Uber Confident Of Recovery
Despite the difficulty suffered in the group’s Ride business over recent months, Uber CEO Dara Khosrowshahi noted that there are indications that the mobility sector of the company is improving and would make a full recovery.
Khosrowshahi noted that Uber had already improved its ranking in 11 of the main 15 markets in the US over Q3, including New York, Atlanta, and Chicago. The Uber head was also keen to point out that its recovery was happening at a quicker pace than other transport options citing the company’s “no mask, no ride” policy was helping reassure customers.
Indeed, Khrosrowshahi went as far as to say:
“Uber comes back when cities come back. If anything, Uber is an advantaged form of transportation versus others”.
Proposition 22 Passed
Uber shares have benefited recently from the group’s proposed ballot measure “Proposition 22”. The motion, which won support in the California elections means that drivers will now be treated as independent contractors and not employees. This affects a huge cost saving for Uber which no longer has to provide sick-pay, health care, unemployment insurance, and other such covers.
Uber Shares breaking Out
The rally in Uber’s share price this week has seen price exploding above the 2020 highs at 41.60. While above here, the focus remains firmly on further upside. The 46.72 level (2019 highs) the next key resistance level to note.
To the downside, any correction below the 41.60 level will put the focus back on the 38.78 level support.