Shares of Uber Technologies Inc. (NYSE:UBER) experienced a sharp decline, falling nearly 9% on Wednesday after the company reported an unexpected net loss for the first quarter and projected second-quarter gross bookings below analysts’ expectations.
This disappointing performance marks a potential slowdown following a robust 2023, during which Uber dominated the U.S. ride-sharing and delivery markets and recorded its first annual profit. The drop in Uber’s stock price, its largest single-day fall since October 2022, could reduce the company’s market value by over $10 billion if the downward trend continues.
Uber disclosed a net loss of $654 million for the quarter, significantly off from analysts’ expectations of a $503.1 million profit. The loss was largely due to legal expenses and adjustments related to the fair valuation of some of the company’s investments.
Additionally, Uber fell short of market forecasts for quarterly gross bookings, a critical indicator of the total transaction value on its platform. Uber CFO Prashanth Mahendra-Rajah attributed the shortfall to decreased ride-share demand in Latin America and the timing of holidays, which impacted the first quarter.
“We were anticipating a slowdown in spending across several markets due to sluggish economic activity in the U.S. in Q1 and ongoing consumer pressures. However, the extent of the decline was unexpected,” commented Thomas Monteiro, a senior analyst at Investing.com.
In contrast, Lyft Inc. (NASDAQ:LYFT), Uber’s smaller competitor, reported better-than-expected results and a positive outlook for the second quarter, buoyed by a general increase in ride-share demand. Since appointing David Risher as CEO in April last year, Lyft has been aggressively cutting costs and capturing market share from Uber with strategies like reducing wait times and offering competitive fares.
Uber, which operates in about 70 countries and holds a 72% share of the U.S. ride-hailing market as of the first quarter, expects its second-quarter gross bookings to be between $38.75 billion and $40.25 billion, which is below the anticipated $40.04 billion.
For the quarter ending March 31, Uber reported gross bookings of $37.65 billion, slightly missing the expected $37.92 billion. Its revenue, however, increased by 15% to $10.13 billion, marginally surpassing the forecast of $10.11 billion. On an adjusted basis, Uber reported a loss of 32 cents per share, against expected earnings of 23 cents per share
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