Shares of Uber Tumble on Surprise Net Loss, Weak Second-quarter Outlook

Uber surprised investors with a first-quarter loss and a forecast of second-quarter gross bookings below Wall Street's expectations, leading to a nearly 9% drop in the shares of the ride-share and food delivery giant on Wednesday. This report raises concerns that Uber's growth may be slowing down following its strong performance in 2023, during which it dominated the U.S. ride-share and delivery markets and achieved its first annual profit.

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The sharp decline in the stock price, the largest single-day drop since October 2022, was poised to wipe out over $10 billion from Uber's market capitalization if the losses persist. Uber reported a net loss of $654 million, driven primarily by legal charges, provisions, and fair valuation adjustments related to certain company investments. This figure fell short of analysts' expectations, who were anticipating a net profit of $503.1 million.

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Additionally, Uber failed to meet market expectations for quarterly gross bookings, a crucial metric indicating the total value of transactions on its platform. CFO Prashanth Mahendra-Rajah attributed this shortfall to weaker ride-share demand in Latin America and the impact of certain holidays shifting into the first quarter. Thomas Monteiro, senior analyst at Investing.com, noted that while a deceleration in spending was anticipated due to sluggish economic activity in the U.S. in Q1 and persistent consumer pressures, the actual outcome exceeded expectations.

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In contrast, Uber's smaller rival Lyft reported better-than-expected results and forecasted a robust second quarter on Tuesday, citing an industry-wide increase in ride-share demand. Lyft, operating primarily in the United States and parts of Canada, has been striving to gain market share from Uber since David Risher took over as CEO in April last year. Risher's cost-cutting measures and efforts to attract users with shorter wait times and competitive fares have contributed to Lyft's positive performance.

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Uber, with operations in around 70 countries and a range of services including freight booking, continued to dominate the U.S. ride-hailing market, capturing a 72% share in the March quarter, up from 68% two years ago according to YipitData. However, the company anticipates second-quarter gross bookings to fall within the range of $38.75 billion to $40.25 billion, below analysts' estimates of $40.04 billion. In the first quarter ended March 31, gross bookings amounted to $37.65 billion, narrowly missing expectations of $37.92 billion.

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Revenue for the quarter increased by 15% to $10.13 billion, slightly exceeding the estimated $10.11 billion. On an adjusted basis, Uber reported a loss of 32 cents per share, compared to expectations of a 23 cent profit.

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