Uber is is pulling back premarket, ostensibly on slightly light revenues and solid but not spectacular guide. At least that's going to be the reason analysts will cite for not taking up their ratings on Uber, despite the company crushing on trailing numbers and guiding to just a whisper better than estimates for the current quarter.
The truth is both more nuanced and quite simple.
1. ) UBER shares are up 42% since April 6th. As discussed on Monday, Uber needed gargantuan numbers across the board. In this economy? Was never going to happen. The stock needed a little rest. We'll see how fast buyers come in:
Yesterday's Pre-Chart:
2.) This wasn't a quarter that was going to change anyone's mind. Uber didn't post terrible news as the stock fell from $80 to $60 earlier this year. It just got dragged down the rest of the flotsam, with a bunch of misunderstood news about autonomous vehicles thrown in on top of it.
Now that Uber has reported huge earnings and cash flow analysts with a bearish take will go back to mumbling about unsustainability and the ever-looming threat of Tesla releasing a fleet of cabs.
At least that's what I suspect happens in the longer haul. Shares are down 5% shortly before the market. If it was 10% lower on the open I'd look to buy but this is a less unambiguously Great story for my purposes than Spotify was.
Let's break it down in the Report Card:
Consumer Tells: B+
Remember when everyone was going to cut back on food and cook at home because of the economy? Uber food delivery grew bookings 15%. More deliveries, more merchants, more money. Maybe we're staying home for more meals but we're not doing it to save money.
Bookings were strong but the revenue weakness came from customers choosing cheaper ride options. Maybe to save money on food later? Hard to say but Uber becomes the latest company to be at most "mildly" cautious about the state of the economy.
AV Obselesence Contra: A-
Uber sees itself as the platform for any car company bringing AV vehicles onto market. The thinking goes that Google / Waymo wants to make the car but the information Uber has spent 10 years gathering (how people travel, optimized routes, and the user base).
If you think Tesla is going to do it all themselves and run the interface nothing Uber said changed your mind.
Management Cool: A
New Category. CEO Dara Khosrowshahi hit the media rounds right after the report hit (even before the call!). He was cool, funny, absolutely a man in command of his game. That stuff matters. Margins expanded and costs are going up. Dara calmly answered questions about cost pressure by saying the company is taking the hit to help the economics of drivers and riders.
Smooooooth.
Overall: B+
I think both that Uber is going to all-time highs AND that Uber is unusually vulnerable to another wave of economic downturn thinking. Like Spotify and Netflix, Uber is a new Essential. But it's not as buffered as those two. Riders who travel less will ride less often. A slow economy means fewer riders. Food orders won't stay strong forever if/ when we get a truly weak economy.
All that whining aside: Freaking amazing company. If anything underrated. The stock has been churning for a year. No need to go assuming it breaks out just yet. Content to wait for it, checking the quote compulsively the way I track my driver's progress on the app.
