Why Is Uber (UBER) Down 14.6% Since Last Earnings Report?

A month has gone by since the last earnings report for Uber Technologies (NYSE:UBER). Shares have lost about 14.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Uber due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Uber Incurs Loss in Q4

Uber incurred a loss of 64 cents per share (or net loss of $1.1 billion, up 24% year over year) in the fourth quarter of 2019, narrower than the Zacks Consensus Estimate of a loss of 68 cents. Moreover, the amount of loss decreased year over year. However, total revenues of $4,069 million missed the Zacks Consensus Estimate of $4,099.8 million but rose 37% year over year.

The better-than expected bottom-line performance coupled with the company’s commentary that it will reap profits on an adjusted basis by the fourth quarter of 2020, boosted investor confidence in the stock. Consequently, shares of the company rallied more than 5% in after-hours trading on Feb 6. Previously, Uber expected to achieve EBITDA profit for the full year in 2021.

Following an organizational change in the third quarter of 2019, Uber started reporting through five segments, namely Rides, Eats, Freight, Other Bets, and Advanced Technologies Group (ATG) and Other Technology Programs.

In the fourth quarter, majority (75.1%) of the company’s revenues came in from Rides, which increased 27% to $3,056 million. Uber Eats revenues jumped 68% to $734 million while Freight revenues soared 75% to $219 million.

Total revenues grew 41% to $2,536 million in the United States and Canada. The same rose 27% to $621 million in Europe, the Middle East and Africa. While total revenues surged 34% to $359 million in the Asia Pacific region, it increased 31% to $553 million in Latin America. Monthly active platform consumers also grew 22% to $111 million.

Gross bookings from Rides improved 18% to $13.51 billion while the same from Eats augmented 71% to $4.37 billion. Gross bookings from Freight also climbed 74% to $219 million. Total gross bookings ascended 28% to $18.13 billion.

Additionally, cost of revenues (excluding depreciation and amortization) at Uber escalated primarily due to higher driver incentives. Total expenses on sales and marketing shot up 22.1% to $1.25 billion in the reported quarter.

Uber exited the fourth quarter with cash and cash equivalents of $10.87 billion compared with $6.41 billion at the end of 2018. Long-term debt, net of current portion, at the end of the quarter was $5.71 billion compared with $6.87 billion at 2018 end.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, Uber has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. It comes with little surprise Uber has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.