Wednesday, March 29, 2023
HomeTechUber shares surge on solid profit forecast as rideshare recovery defies inflation

Uber shares surge on solid profit forecast as rideshare recovery defies inflation

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By Nivedita Balu
(Reuters) -Uber Technologies Inc on Tuesday forecast fourth-quarter operating profit above Wall Street estimates, betting on cost controls and rising demand for its rides as customers resume spending more on travel, sending its shares up 13%.

With cities reopening and travel booming, consumers are shifting their budgets to services, Chief Executive Dara Khosrowshahi said, compared to the two years of COVID-led lockdowns when they had limited spending to basic needs.

“Right now, frankly, we’re not seeing any signs of consumer weakness,” Khosrowshahi told analysts, with robust demand for rideshare and food delivery even in Europe where the cost of living has been soaring.

Monthly active users on Uber’s apps rose 14%, exceeding the levels seen in September 2019, helped by airport trips, while revenue from the rideshare segment rose 73% in the third quarter.

Uber, however, is looking to scale back hiring and reduce expenses to expand profitability as Khosrowshahi warned of a potential hit from a strong dollar to its earnings from the overseas.

The company, which had faced driver shortages in the United States during its recovery from pandemic losses, said active drivers too are back to September 2019 levels as inflation pushes many to look for sources of additional income.

The company forecast fourth-quarter adjusted EBITDA, a profitability metric keenly watched by investors, between $600 million and $630 million. Analysts were expecting $569.39 million, according to Refinitiv data.

“It is just more confirmation that this can be a very profitable business,” Fox Advisors CEO Steven Fox said.

Gross bookings, or the total dollar value from its services, is expected to grow between 23% and 27% compared to a 26% rise in the quarter ended Sept. 30.

Revenue rose 72% to $8.34 billion and adjusted profit was $516 million, both beating estimates. However, quarterly loss came in at $1.2 billion, hurt by Uber’s equity investments.

Shares of peers Lyft Inc and DoorDash Inc, which are yet to report results, were also trading higher.

(Reporting by Nivedita Balu in Bengaluru, additional reporting by Akash Sriram in Bengaluru; Editing by Arun Koyyur)

Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.

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