Uber Technologies Inc (NYSE: UBER), the ridesharing giant, took a hit in the stock market after reporting a wider net loss for Q1 2024. The company’s core business is thriving despite the headline loss of $654 million, primarily attributed to equity investment revaluations.
Gross bookings, a key metric reflecting total ride and delivery value, surged 20% year-over-year to a whopping $37.7 billion. This translated to a healthy 15% revenue increase to $10.1 billion. Even profitability at the operational level saw a significant improvement, with income from operations jumping by nearly half a billion from a loss in the same period last year.
Uber boasts a growing and loyal user base with 149 million monthly active users, a 15% increase year-over-year. Looking ahead, the company is optimistic, projecting continued growth in bookings of 18-23% for Q2 and a substantial increase in profitability, with adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) expected to be between $1.45 billion and $1.53 billion. This would represent a remarkable 58-67% growth. Will Uber overcome its net loss and translate its strong underlying business performance into sustained profitability?
Technical
After soaring to an all-time high, Uber’s share price has embarked on a downward trajectory, influenced by prevailing selling pressures. The formation of a descending channel pattern, coupled with convergence with the 100-day moving average, signals a bearish sentiment dominating the market sentiment.
Previously, the $57.33 per share level served as a sturdy support, fuelling the rally towards the peak. However, encountering overbought RSI conditions at $82.14 per share posed a significant challenge to the uptrend, triggering a downturn and establishing it as a resistance level.
Following the earnings release, the share price breached below critical technical indicators, including the 100-day moving average and the 61.80% Fibonacci Retracement Golden Ratio, amplifying downside momentum. If downward pressures persist, this suggests a potential retest of the $57.33 support level. Conversely, renewed buying interest could propel the share price upwards, with the $82.14 per share level emerging as a pivotal resistance level to watch for potential upside gains.
Summary
Despite setbacks in stock performance, Uber’s strong fundamentals, including impressive revenue and user growth, suggest resilience. The stock faces technical challenges with support at $57.33 and resistance at $82.14, indicating potential price swings. Investors will likely pay attention to whether Uber can convert operational success into sustained profitability amidst market fluctuations.
Sources: Uber Technologies Inc, Reuters, CNBC, Nasdaq, Financial Times, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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