|
|
|
|
|||||
|
|
|
On May 7, San Francisco, CA-based Uber Technologies UBER, which provides ride-hailing, food delivery and freight (leasing vehicles to third parties) services through its Mobility, Delivery, and Freight segments, respectively, released mixed first-quarter 2025 results. While earnings per share surpassed the Zacks Consensus Estimate, revenues fell short of the same.
The revenue miss in the March quarter naturally disappointed investors, resulting in the stock declining 4.3% since the earnings release. The market’s reaction may be perceived as a golden buying opportunity. Let’s explore.
Uber’s first-quarter 2025 earnings per share of 83 cents outpaced the Zacks Consensus Estimate of 51 cents. In the year-ago quarter, the ride-hailing company had incurred a loss of 32 cents per share.
Total revenues of $11.5 billion fell short of the Zacks Consensus Estimate of $11.6 billion. The top line jumped 14% year over year on a reported basis and 17% on a constant currency basis. With economic activities returning to normal levels in the post-pandemic scenario, people are traveling to work and other places as before. As a result, UBER’s Mobility business has been seeing buoyant demand, with segmental revenues increasing 18% in the March quarter on a constant currency basis.
With customer traffic picking up, gross bookings from the unit were highly impressive, aiding first-quarter results. Gross bookings from the Mobility segment in the March quarter increased 20% year over year on a constant currency basis to $21.2 billion.
Uber’s Delivery business also performed well in the quarter, with segmental revenues growing 22% year over year on a constant currency basis. Gross bookings from the Delivery segment in the March quarter rose 18% year over year on a constant currency basis to $20.4 billion. Trips soared 18% to 3 billion. Monthly Active Platform Consumers increased 14% year over year to 170 million. The company reported free cash flow of $2.25 billion in the quarter, highlighting its financial bliss.
The earnings beat by Uber in the March quarter enabled it to maintain its excellent earnings surprise track record. Uber has outpaced the Zacks Consensus Estimate in each of the past four quarters, the average beat being 212.3%.
In the June quarter, gross bookings are anticipated to be in the $45.75-$47.25 billion range, representing growth on a constant currency basis in the 16-20% band from second-quarter 2024 actuals.
The guidance includes an estimated 1.5 percentage point impact of currency headwind (including a roughly 3 percentage point currency headwind to Mobility). Our estimate for second-quarter 2025 gross bookings is currently pegged at $45.7 billion.
In the second quarter, adjusted EBITDA is estimated to be in the range of $2.02 billion to $2.12 billion, suggesting year-over-year growth of 29% to 35%.
Uber has navigated the recent tariff-induced stock market volatility well, registering a 36.5% year-to-date gain, while the Zacks Internet-Services industry is down in double digits. Uber’s main competitor, Lyft LYFT, has gained merely 0.8% in the same timeframe. Another industry player, DoorDash DASH, has performed better than Lyft but underperformed Uber year to date, gaining 9.1%.
From a valuation perspective, Uber is trading relatively expensive. Going by its price/earnings ratio, the company is trading at a forward earnings multiple of 28.97, above the industry’s 16.39. The company has a Value Score of D. Meanwhile, Lyft looks too cheap at a forward earnings multiple of 11.41, whereas DoorDash’s P/E sits at 69.48. Lyft and DoorDash have a Value Score of B and F, respectively.
Despite the market's reaction to Uber’s second-quarter 2025 revenue miss and headwinds like high debt, Uber's fundamentals remain strong. Even though Uber’s primary business is ridesharing, it has diversified into food delivery and freight over time. Diversification is imperative for big companies to reduce risks, and UBER has excelled in this area. The company has engaged in numerous acquisitions, geographic and product diversifications, and innovations. Uber’s endeavors to expand into international markets are commendable and provide it with the benefits of geographical diversification.
Uber aims to gain a stronghold in the highly promising robotaxi market through strategic partnerships. The above association is a step on that front. By adopting this approach, Uber has avoided the massive R&D costs associated with developing autonomous systems independently.
Uber’s scale, targeted market expansions and diversification strategies position it well for long-term growth, supporting the idea that its high valuation may be justified. Given its solid long-term potential (UBER’s long-term earnings [three to five years] growth rate is 36%, way ahead of its industry’s 16.7%), retaining this Zacks Rank #3 (Hold) stock appears prudent. Meanwhile, new investors might consider waiting for a more attractive entry point.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
This article originally published on Zacks Investment Research (zacks.com).
| 1 hour | |
| 1 hour | |
| 5 hours | |
| 5 hours | |
| 6 hours | |
| 6 hours | |
| 6 hours | |
| 6 hours | |
| 7 hours | |
| 8 hours | |
| 8 hours | |
| 8 hours | |
| 9 hours | |
| 10 hours | |
| 10 hours |
Join thousands of traders who make more informed decisions with our premium features. Real-time quotes, advanced visualizations, backtesting, and much more.
Learn more about FINVIZ*Elite