Uber Stock Falls Despite Q3 Earnings Beat, Strong Rides Demand

Uber technologies (UBER) stock was down early Tuesday, even though the ride-hailing and food delivery company delivered third-quarter results ahead of expectations. A slight miss in Uber’s adjusted earnings and profit expectations could weigh on the stock.

Uber said it earned $3.11 per share in the quarter ended in September, far exceeding 69 cents per share. That was expected by analysts polled by FactSet. Revenue rose 20% to $13.47 billion, beating analysts’ estimates of $13.28 billion. This was the second straight quarter of accelerating revenue growth.

Uber’s earnings per share jumped 159% year over year. But that included a $4.9 billion benefit from the “tax assessment release,” Uber said in a press release, as well as a $1.5 billion pre-tax benefit from the revaluation of Uber’s stock investments.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose 33% to $2.26 billion, slightly below estimates of $2.27 billion.

Meanwhile, Uber’s total bookings rose 21% to $49.74 billion, beating estimates of $49.02 billion. Reservations include the prices charged, as well as the total costs charged for food delivery and other services. Total Uber trips rose 22% to 3.5 billion trips.

“Uber’s growth began at full speed in the third quarter, representing one of the largest increases in trip volume in the company’s history,” Uber CEO Dara Khosrowshahi said in a press release. “We are building on this momentum by investing in lifelong customer relationships, building on our local commerce strategy, and harnessing the transformative potential of artificial intelligence and autonomy.”

Uber forecast

For the current quarter, Uber said it expects total bookings to reach $53 billion, at the midpoint of the given range. Analysts were looking for $52.2 billion, according to FactSet. Uber also guided for adjusted EBITDA of $2.46 billion at the midpoint, slightly below expectations of $2.47 billion.

“Uber reported roughly adjusted EBITDA in the third quarter with better bookings in both mobility and delivery, offset by lower margins,” Needham analyst Bernie McTiernan wrote in a note to clients on Tuesday. “(Q4) guidance follows a similar trend with better bookings at the midpoint but adjusted EBITDA slightly lower.”

Uber is focusing on expanding the use of autonomous vehicles across its ride-hailing network. In prepared remarks posted on Uber’s website, Khosrowshahi said the company hopes to be live with self-driving vehicles in 10 cities by the end of next year. Uber has partnered with AV developers like Waymo in some cities.

But it is also investing in bringing new robotaxis into production. Uber has made “hundreds of millions of dollars in investments” in the electric car company clear (LCID) and AV technology startup Nuro earlier this year as part of a plan to launch a new robotaxi service. The service will launch on the Uber app in the San Francisco Bay Area sometime next year and will use Lucid cars equipped with Nuro technology, Uber announced last month.

Ober Stock Falls

On the stock market today, Uber shares fell by more than 6%, reaching 93.43 in morning trading. Shares fell below Uber’s 50-day moving average.

Uber was facing high expectations before the report was released. Uber stock is up 65% year-to-date through Monday.

Prior to the report, Uber stock had an IBD Composite Rating of 92 out of a top 99, according to IBD Stock Screener. The score combines five separate property ratings into one rating.

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