Uber Stock Rallies After Strong Q2, But Can It Hold the Gains?

TLDR

• Uber rose 3.4% after Q2 EPS of $0.81 beat the $0.80 consensus estimate
• Revenue came in at $14.19 billion, up 12.2% year over year, slightly below the $14.24 billion forecast
• Gross bookings jumped 24% to $58 billion; adjusted EBITDA rose 33% to $2.8 billion
• Q3 EPS guidance of $0.84-$0.88 came in below analyst consensus of $0.89-$0.91
• Analysts hold a “Moderate Buy” consensus with an average price target of $104.25

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Uber Technologies (UBER) jumped 3.4% on Thursday after the company posted a stronger-than-expected second quarter. The stock traded as high as $71.37 before closing at $70.51, up from its prior close of $68.18.

Uber Technologies, Inc., UBER

Q2 EPS came in at $0.81, beating the $0.80 consensus by a penny. Revenue reached $14.19 billion, up 12.2% from the same period last year, though it fell just short of the $14.24 billion analyst estimate.

Volume was notably elevated. Around 31 million shares changed hands, a 59% jump from the average daily session volume.

The underlying numbers were strong. Gross bookings climbed 24% to roughly $58 billion, and trips rose 18% to 3.9 billion. Monthly active platform consumers grew 16% to 208 million.

Adjusted EBITDA came in at $2.8 billion, up 33% year over year. Trailing 12-month free cash flow topped $10 billion.

Net margin stood at 17.34%, with return on equity at 43.36%. GAAP diluted EPS hit $1.17 for the quarter.

Q3 Guidance Falls Short

Uber guided Q3 adjusted EPS to $0.84-$0.88. That trails the roughly $0.89-$0.91 analyst consensus and is already drawing some attention from investors.

Management also flagged ongoing foreign exchange headwinds, which are expected to weigh on reported growth in the coming quarter.

The company noted slower trip growth in Brazil, citing stronger local competition as a drag on the region.

Analyst Reaction and Price Targets

Analyst reaction was mixed but leaned positive. Guggenheim and Needham reaffirmed Buy ratings, with price targets of $125 and $109 respectively.

Bank of America kept its Buy rating and raised its earnings outlook, though it trimmed its price target. Piper Sandler set a $106 target, and KeyCorp held an Overweight rating with a $105 target.

Susquehanna cut its target from $110 to $90, though it kept a Positive rating.

The current consensus stands at “Moderate Buy” with an average price target of $104.23, well above Friday’s opening price of $74.94.

Institutional investors hold 80.24% of the stock. Chesley Taft and Associates raised its stake by 19.9% in Q2, adding 45,090 shares to reach 271,677 shares valued at around $19.6 million.

Uber also entered a new senior unsecured term-loan credit facility during the quarter, adding financial flexibility as it ramps up capital deployment.

Management said AI efficiency gains are reducing cost per token, which could help limit future expense growth.

The company plans to invest more than $10 billion in autonomous vehicles and acquisitions, including a proposed Delivery Hero transaction. Reports indicate Uber is looking to acquire up to 50,000 Rivian electric SUVs to support its robotaxi ambitions.

Transport for London granted licenses to Wayve vehicles for supervised private-hire rides, moving Uber a step closer to launching autonomous services in the city.

Uber’s 52-week range sits between $65.41 and $101.99. The stock opened Friday at $74.94 with a market cap of $152.56 billion.