Uber Technologies’ UBER shares jumped 11.5% at the close of business on Sep 21, following the company’s improved outlook for the third quarter of 2021.
Per a SEC filing, Uber now expects adjusted EBITDA between negative $25 million and positive $25 million, compared with its previous expectation of “better than a loss of $100 million”. This revised guidance implies that the company might record adjusted EBITDA profits earlier than its previous expectation of achieving the same in the fourth quarter of 2021. Uber said that it reaped adjusted EBITDA profits in July and August due to strong improvements in Mobility and Delivery adjusted EBITDA. Uber CFO, Nelson Chai, said, “With positive Adjusted EBITDA in July and August, we believe Uber is now tracking towards Adjusted EBITDA breakeven in Q3, well ahead of our prior guidance.” Uber’s rival, Lyft LYFT, achieved its adjusted EBITDA profitability target in the second quarter of 2021, ahead of its projected timeline of the third quarter of 2021. Both Uber and Lyft carry a Zacks Rank #3 (Hold).
Uber estimates gross bookings in the range of $22.8-$23.2 billion for the third quarter, compared with the previous expectation of $22-$24 billion. For the fourth quarter, the company predicts adjusted EBITDA of $0-$100 million. It expects adjusted EBITDA to improve sequentially in the fourth quarter despite continued investments to drive growth. With ride volumes recovering from the coronavirus-led lows, Uber invested heavily in driver supply in the second quarter. The company is seeing this pay off in the third quarter. Per a CNBC report, Uber CEO, Dara Khosrowshahi, said, “What we did was, early on we identified our need to bring on more drivers onto the platform. So, in the second quarter, we really leaned into supply, especially in the United States, to reinvigorate our driver base and grow our driver base in the U.S.” Khosrowshahi added, “We’re seeing that now, the benefits of that early investment, in Q3.”
Uber Technologies, Inc. Price
Uber Technologies, Inc. price | Uber Technologies, Inc. Quote
Amid a spurt in demand for rides and a shortage of drivers, Uber customers, who had been seeing increasing ride costs, might get some relief in the back half of the year. With driver supply issues having eased, prices are expected to stabilize toward the end of the year, Khosrowshahi told CNBC.
Key Picks
Some better-ranked stocks in the Internet – Services industry are Shopify SHOP and Dropbox DBX. While Shopify sports a Zacks Rank #1 (Strong Buy), Dropbox carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Shopify and Dropbox have rallied more than 56% and 57% in a year’s time, respectively.
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