Uber earnings preview: what to expect from Q4 results

Uber shares will be in focus this week ahead of its latest set of quarterly results, with investors hoping the company can continue to improve profitability despite the problems posed by the pandemic.

Uptrend 3

When will Uber release its Q4 results?

Uber will release results covering the fourth-quarter (Q4) of 2020 at 1330 PT (1630 ET or 2130 GMT) on Wednesday February 10.


Uber earnings consensus: what to expect

The coronavirus pandemic has posed problems for Uber but also provided opportunity. Whilst its core business of shuffling people from A to B has been hard-hit as people stay at home, demand for its delivery services has rocketed and helped soften the blow.

The story at the time of its last set of results covering Q3 was all about Uber’s recovery from the depths of Q2, when lockdowns were introduced and the pandemic started to bite. Gross bookings for its rides business almost doubled in Q3 compared to Q2, and bookings through its delivery system continued to grow.

Investors will want to see this trend continue in Q4. They will have already taken some comfort from chief executive Dara Khosrowshahi, who said he expected adjusted Ebitda losses would improve year-on-year in Q4.

The current consensus, compiled by Reuters, expects Uber to deliver a quarterly adjusted Ebitda loss of $513.5 million compared to the $615.0 million loss reported the year before. Revenue is expected to be down 12% year-on-year.

Uber Earnings Consensus

Q4 2019

Q4 2020e

FY 2019

FY 2020e

Revenue

$4.06 billion

$3.57 billion

$14.14 billion

$12.33 billion

Adjusted Ebitda

($615.00 million)

($513.47 million)

($2.72 billion)

($2.63 billion)

Net loss

($1.09 billion)

($949.72 million)

($8.50 billion)

($6.69 billion)

(Source: Reuters)

For the full year, revenue is expected to fall 14.6% to £12.3 billion but losses should narrow year-on-year, which would represent a resilient performance for a company that still largely relies on travel in the current climate.


Can Mobility’s profitability continue to improve?

The Mobility division, which encompasses its core ride-hailing activities, remains the backbone of Uber.

Although sales have understandably slumped this year during the pandemic, with revenue down by more than half year-on-year in Q3, Uber has managed to continue to improve the division’s profitability. The division reported adjusted Ebitda of $245 million in Q3 compared to just $50 million in Q2, largely thanks to a 93% quarter-on-quarter rise in bookings.

Mobility is the driver of earnings in the business and the consensus suggests this could improve further in Q4. Importantly, this means Uber’s core business will be much more profitable when the market ultimately recovers, and people start travelling again.


Can Delivery services continue to grow and shrink losses?

The Delivery division is Uber’s fast-growing and ever-expanding market. It is underpinned by providing orders and delivery services for restaurants but is gradually expanding to help transport everything from groceries to prescription medicines to people’s doors. It is already taking over $1 billion in annualised grocery delivery sales as of September 2020.

This side of the business has naturally benefited from the pandemic as people not only stay-in but order-in. Sales were up 125% year-on-year in Q3, demonstrating the accelerated uptake of Uber’s services during the pandemic.

The division is still in the red at the adjusted Ebitda level, but losses have been narrowing. The adjusted Ebitda loss in Q3 was $183 million compared to $232 million in Q2, and investors will want to see this trend continue in Q4.


How are Postmates and Drizly performing?

Investors will also be keen to get an update how Uber’s latest acquisitions are performing, particularly Postmates, which Uber formally acquired on December 1. Uber is likely to still be merging Postmates into the wider business, although it is to remain a standalone app.

There is also alcohol delivery firm Drizly that Uber agreed to buy in a $1.1 billion cash-and-stock deal earlier this month. Therefore, Drizly will not feature in Uber’s Q4 results but Uber may incorporate the company, as well as Postmates, into any guidance it provides for 2021.


Will Uber achieve its profitability goals by the end of 2021?

If Uber can continue to shrink losses from its Delivery arm and deliver significantly better profitability from its Mobility unit then Uber is well on the way to becoming profitable at the bottom-line despite the tough conditions over the past 12 months.

The main guidance to look out for is whether Uber continues to back its hopes of posting its first quarterly adjusted Ebitda ‘before the end of 2021’. It is worth remembering that it was only in 2019 that Uber said it may never make a profit.

Plus, investors will want to watch out for any insight into how the company has fared in early 2021. Whilst many countries had more laxed restrictions in place during the holiday season in Q4, many have re-entered lockdown or imposed stricter rules since the start of the new year that may derail Uber’s recovery.


How to trade Uber’s results

Uber shares have continued to gain ground despite the troubles posed by the pandemic, as investors look at the long-term opportunity that will come from the pandemic accelerating the delivery market and the expected recovery in its core mobility business later this year.

Uber shares performed well on results days during 2020. Shares jumped 4.7% in August when it released its Q2 results and beat revenue and earnings expectations. Meanwhile, although it disappointed on both fronts in November when it released its Q3 results, shares still climbed 2% higher.

Brokers are currently extremely bullish on Uber. According to Reuters, 12 brokers have a Strong Buy rating on the stock, 21 rate Uber as a Buy, 4 Hold, and just 2 as Sell. However, the average target price of $57.88 currently sits slightly below Uber’s share price, suggesting it may be trading close to the value placed on the company by brokers.


Where next for the Uber share price?

Uber trades up 44% over the past twelve months after seeing a steady recovery from the mid-March low with the bullish move gaining momentum since the announcement of covid vaccine efficacy in early November.

The stock currently trades above its 20 & 50 sma on the daily indicating an established bullish trend. Meanwhile the RSI is above 50 but still some distance from overbought territory at 70 suggesting there could be more upside to come.

However, the price would need to overcome strong resistance at 60, the all-time high in order to target the ascending trendline resistance of 63

Failure to break above 60 could see the price rebound lower to horizontal support at 56 and the subsequent formation of a head a shoulders bullish reversal pattern. A breakthrough 56 could see 53.50 the 50 sma tested before the bears target 47, the yearly low.



How to trade Uber shares

You can trade Uber shares with City Index using spread-bets or CFDs, with spreads from 0.1%.

Follow these easy steps to start trading Uber shares today.

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for ‘Uber’ in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade 

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