Uber Anticipates Stronger Q4 Profits Amid Holiday Demand

UBER Stock

Uber (NYSE:UBER) is optimistic about a more profitable fourth quarter as it anticipates increased demand for its ride-hailing and food delivery services during the holiday season. The ride-sharing giant experienced a slowdown in growth in the third quarter due to changes in revenue recognition methods, which negatively impacted its main businesses and led to revenue falling short of expectations.

Uber has been contending with stiff competition from Lyft, which has reduced fares to attract customers, while concerns about ride-sharing demand have arisen due to persistent inflation. However, Uber’s CEO, Dara Khosrowshahi, remains upbeat about the company’s prospects, stating, “Consumer demand on our platform remains healthy as we enter the busiest period of the year.”

Khosrowshahi further emphasized that this positive trend continued into the fourth quarter, with October seeing all-time highs in overall trips and gross bookings, driven by strength in both mobility and delivery services.

Uber has projected that its fourth-quarter adjusted core profit, a key profitability metric, will fall within the range of $1.18 billion to $1.24 billion, surpassing estimates of $1.15 billion, as reported by LSEG data. Gross bookings, representing the total dollar value earned from its services, are expected to range between $36.5 billion and $37.5 billion, compared to previous expectations of $36.31 billion.

Analysts at William Blair also expressed confidence in Uber’s performance, citing the company’s record 6.5 million active drivers during the third quarter as a sign of strength. They believe Uber is well-positioned to achieve robust results.

Optimism regarding travel demand during the holiday season is not limited to Uber; it is expected to benefit Lyft as well, which is set to report its earnings on Wednesday.

In the third quarter, Uber’s revenue growth slowed to its lowest pace since 2021, reaching $9.29 billion, which fell short of the estimated $9.52 billion. However, Uber’s adjusted core profit of $1.09 billion exceeded expectations of $1.02 billion. Nevertheless, the company’s net earnings per share missed estimates by 2 cents.

Uber’s shares experienced a 1% increase in early trading, following volatile premarket activity.

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