Uber Technologies Inc. (UBER), the ride sharing giant and most high profile IPO in years, has faced enormous skepticism among investors amid mounting losses despite surging revenues. That's why its shares plunged in the days following its public offering in May, though they have since recouped most of their losses.
Uber's sheer size will make it a focal point of investor attention when it announces its second quarter of earnings as a public company on August 8. Uber's $73 billion market value dwarfs, for example, auto giants General Motor Co.'s (GM) $58 billion and Ford Motor Co.'s (F) $37 billion, both of which were founded more than a century ago.
What Uber Investors Are Watching ForInvestors are likely to look at a number of key issues when the company reports earnings. Most important, they are sure to focus on whether Uber can be viable financially longterm by narrowing its financial losses as it attempts to boost revenue at a rapid rate. Investors also will want to know how much fare increases in major markets such as New York are hurting consumer demand, which is crucial to maintaining revenue growth. Investors also will want know about progress at business segments like meal-delivery service Uber Eats or trucking service Uber Freight. Both of those businesses may prove crucial in moving Uber into the black.
Analysts’ 2Q EstimatesAnalysts are expecting a 22% gain in revenue for the latest quarter, solid but not spectacular growth for Uber. But analysts expect losses to continue both for the quarter and for all of 2019, according to consensus estimates per Yahoo! Finance. In Uber’s first earnings report in May, the company reported losses of $1.01 billion, in line with analysts’ estimates while revenue beat estimates and increased 20%, per CNBC.
Regulatory PushbackOne major threat facing Uber is higher ride hailing prices for consumers, which threatens its growth. New York City, one of Uber's major markets, recently implemented new regulations for ride-hailing companies that are boosting prices for consumers in two different ways. The city is requiring passengers to pay congestion surcharges. And regulators also imposed minimum wage rules for drivers, which prompted Uber and its rivals to raise ride hailing fares. Already, total Uber trips in New York were down in May by 8% from March, according to Bloomberg.
Looking AheadGiven those challenges, Uber CEO Dara Khosrowshahi may depend more than ever on his other businesses to generate profit growth. That includes Uber Eats. Khosrowshahi says that at some point it may be logical to merge Uber Eats with a competing food delivery company.