Uber’s Surprise Loss Triggers 9% Drop in Share Price

Uber Technologies posted a surprise quarterly loss and forecasted lower gross bookings than Wall Street anticipated, sending its stock tumbling by 9%. The ride-share and food delivery giant’s disappointing results come in stark contrast to its smaller competitor, Lyft, which announced positive guidance, leading to an 8% rise in its share price.

Uber’s forecast raised concerns about a slowdown in growth following a strong 2023, when the company posted its first annual profit. The first-quarter gross bookings fell short of analysts’ expectations, indicating a dip in the total dollar value of transactions on the platform.

Chief Financial Officer Prashanth Mahendra-Rajah cited softer ride-share demand in Latin America and the impact of certain holidays shifting into the first quarter as factors contributing to the downturn. Uber operates in about 70 countries, offering a range of services, including meal deliveries and freight booking. According to YipitData, Uber held a 72% share of the U.S. ride-hailing market in the March quarter, up from 68% two years ago.

However, Uber’s net loss of $654 million—driven by legal charges, provisions, and fair valuation-related issues—contrasted sharply with analysts’ expectations of a $503.1 million net profit. Adjusted earnings showed a loss of 32 cents per share, against an anticipated profit of 23 cents.

Thomas Monteiro, a senior analyst at Investing.com, noted that while a deceleration in average spending was expected due to slower economic activity in the U.S. and ongoing consumer pressures, the extent of the loss exceeded forecasts.

Lyft, Uber’s smaller rival, delivered a more optimistic outlook, driven by a broader industry-wide demand uptick and aggressive cost-cutting measures under new CEO David Risher, who took over in April. Lyft has focused on shorter wait times and competitive fares to attract more users.

Uber’s second-quarter gross bookings are expected to be in the range of $38.75 billion to $40.25 billion, slightly below estimates of $40.04 billion. For the quarter ending March 31, Uber’s gross bookings reached $37.65 billion, missing expectations of $37.92 billion. Revenue increased 15% to $10.13 billion, slightly above the estimated $10.11 billion.

As Uber navigates a challenging environment marked by softer demand and increased competition, the company will need to strategise to recover investor confidence and reverse the downturn in its share price.