Uber results to test the rally of 34% of the shares in 2023

Uber Technologies (UBER) has been on a roll ahead of fourth-quarter results due to be released before markets open on Wednesday, with demand for its rides and deliveries rising, fares higher and driver supply fully recovered from heavy losses caused by the pandemic.

The company is on track to post the first profitable year in its history based on adjusted EBITDA, a measure that excludes interest, tax, depreciation and amortization costs, as well as significant expense from Uber’s stock-based compensation.

Three months ago, Uber projected fourth-quarter adjusted EBITDA of about $615 million. That would bring annual profit to about $1.7 billion, compared with a loss of $774 million a year earlier.

Market consensus is in line with that forecast, while anticipating a net loss of 16 cents per share based on the median estimate of analysts tracked by Visible Alpha. (Net earnings include costs excluding adjusted EBITDA, as well as changes in the market value of Uber’s multi-billion dollar portfolio of equity investments.)

Analysts expect revenue of $8.4 billion, a 46% year-over-year gain boosted by a late-2021 acquisition as well as a change in Uber’s business model in the UK. In November, Uber projected fourth-quarter gross bookings of $30 billion to $31 billion, representing 23% to 27% year-over-year growth adjusted for a 7 percentage point currency headwind.

In the third quarter, gross bookings increased 32% year-over-year in constant currency terms, while the number of rides on the platform increased 19% year-over-year, helped by a 14% increase in monthly active users of a year earlier. “Behind this performance are several trends that represent tailwinds for us: cities reopening, travel booming, and more broadly, a continued shift in consumer spending from retail to services,” he said. Uber CEO Dara Khosrowshahi on the company’s third quarter conference call. The strong demand continued into October, he added.

As of September, the number of active passengers in Uber’s mobility segment increased from the previous three years, before the COVID pandemic. The number of drivers on the platform has also completely reversed its pandemic decline.

“The bumpier parts of the journey are in the rear view mirror” for Uber and its surviving competitors, as their increasing scale increases profitability and allows them to keep marketing costs low, a MoffettNathanson analyst wrote in initiating coverage of the stock. from Uber with an upper rating and a $47 share price target last week.

With car prices rising sharply since the start of the pandemic and higher interest rates making debt-financed purchases even less affordable, Uber and rival ride providers will benefit, Piper Sandler analysts wrote. a month ago when they upgraded the stock to overweight from neutral with a $33 price target, which the stock hit last week. New car prices have risen 18% in the last two years; used car prices are 25% higher during the same period.

Uber’s third-quarter comment that it has reached “a tipping point” to “expand profitability over the next few quarters” and rising investor expectations have fueled a 34% share price rally since early 2023 , trimming the stock’s decline over the past year to 4.2% (see chart below).

Key Uber Stats