Uber shares tumble on surprise net loss, weak second-quarter forecast
Technology
Uber shares tumble on surprise net loss, weak second-quarter forecast
(Reuters) - Uber posted a surprise first-quarter loss and forecast gross bookings in the second quarter below Wall Street expectations, sending the shares of the ride-share and food delivery company down nearly 9% on Wednesday.
The report suggests that Uber's growth could be slowing after a strong 2023 in which it dominated the US ride-share market and delivery business and posted its first annual profit.
The stock price slide, its steepest single-day decline since October 2022, was set to erase more than $10 billion from Uber's market value if losses hold.
Uber reported a net loss of $654 million, driven by legal charges and provisions and those related to fair valuation of certain company investments. Analysts were expecting a net profit of $503.1 million.
Uber also missed market expectations for quarterly gross bookings, a key metric that indicates the total dollar value of transactions on the platform.
CFO Prashanth Mahendra-Rajah attributed it to softer ride-share demand in Latin America and the impact of certain holidays shifting into the first quarter.
"We were already expecting a deceleration in average spending in several markets due to slower-than-expected economic activity in the US in Q1 and persistent consumer pressures. However, this is way above the base case," said Thomas Monteiro, senior analyst at Investing.com.
In contrast, smaller rival Lyft posted better-than-expected results and forecast a strong second quarter on Tuesday, saying it saw an industry-wide pickup in ride-share demand.
Lyft, which operates in the United States and parts of Canada, is trying to take market share from Uber since it hired David Risher as CEO last April.
Besides aggressively cutting costs, Risher has managed to add users to Lyft with shorter wait times and competitive fares.
Uber operates in about 70 countries and offers services, including freight booking. It had a 72% share in the US ride-hailing market in the March quarter, up from 68% two years ago, according to YipitData.
Uber said it expects second-quarter gross bookings, or the total dollar value earned from its services, in the range of $38.75 billion to $40.25 billion, below estimates of $40.04 billion.
In the quarter that ended Mar. 31, gross bookings came in at $37.65 billion, closely missing expectations of $37.92 billion.
Revenue rose 15% to $10.13 billion, narrowly beating the estimate of $10.11 billion. On an adjusted basis, Uber lost 32 cents per share, compared with expectations of 23 cent profit.
