The main line
Shares of Uber soared on Tuesday after the company reported better-than-expected sales and posted a positive cash-flow first quarter despite rising inflation and fears of a looming recession — signaling the strength of US demand for rides which has fueled recent gains in the rival’s shares. Lyft and hotel operators Marriott and Hilton.
Uber bookings hit a record $29.1 billion in the second quarter – shares are up 14%.
Key facts
Shares of Uber rose as much as 14% to $28.20 in early trading on Tuesday after the company reported record customer bookings of $29.1 billion in the second quarter (up 33% from a year ago) and quarterly revenue of $8.1 billion , more than doubling from last year and beating previous expectations of $7.4 billion.
Although the company also posted a loss of $2.6 billion — driven in part by a $1.7 billion hit from Uber’s equity investment — it reported a positive first quarter of cash flow, which grew by $780 million in 382 million dollars per quarter.
In a post-earnings conference call, Uber CEO Dara Khosrowshahi acknowledged that the recovery is “still ongoing” in some US cities, particularly on the West Coast, but said demand should continue to improve in the second half and noted looks like Uber rides are back. at record levels, growing 24% year-on-year and 12% compared to 2019.
In a note to clients after the report, Wedbush analyst Dan Ives wrote that the surprisingly better-than-expected results bode well for Uber’s ability to generate profits as it navigates inflationary pressures in the U.S. and Europe and pockets of driver shortages that still continue in some cities. , thanks to the return of travel and a growing number of people returning to the office.
“Riding is on fire,” analyst Adam Crisafulli of Vital Knowledge Media said in emailed comments Tuesday, noting that Uber’s resilient rideshare business last quarter should bode well for competitor Lyft (i which is similarly rising 13% on Tuesday) and that hotel operators Marriott and Hilton also posted “terrific” second-quarter earnings results thanks to resurgent travel.
Key background
Shares in transport and leisure firms rose from pandemic-era lows as travel demand rebounded strongly last year, but high inflation and fears of a recession this year have hit the industry particularly hard. . Uber is down 36% this year, while the S&P 500 is down about 15%. Now, analysts are hoping for a turnaround: Of the nearly 50 covering Uber stock, the average price target stands at nearly $48 a share — implying more than 70% upside from current levels.
Surprising fact
In a report last month, Morningstar analyst Dave Sekera said Uber and Lyft are well-positioned to benefit as the pandemic continues to ease, and noted that both companies’ shares are trading at some of the “most undervalued levels” in comparison. with other shares in the market.
tangential
Shares of Marriott and Hilton are up about 15% over the past month—outpacing the S&P’s roughly 10% gain over the same period. In a statement alongside earnings on Tuesday, Marriott CEO Anthony Capuano noted that demand has grown across all customer segments and said the firm’s strong results underscore the momentum of the recovery and “consumers’ love of travel.”
What to look for
Lyft is scheduled to report earnings Thursday after the market closes. Analysts expect the firm to remain unprofitable and have revenue of $988 million, up 42% from a year ago.
Further reading
Cruise stocks sink after Carnival announces $1 billion stock sale (Forbes)
