The Stock of Uber Falls Despite Its 'strongest Quarter Ever.' Here's Why

Uber Technologies Inc. reported what Chief Executive Dara Khosrowshahi described as its “strongest quarter ever,” but that wasn’t enough to boost its stock early Wednesday. The ride-hailing company fell short on a key aspect of its outlook, leading to a decline in its share price.

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Despite exceeding expectations in several areas, Uber’s stock dropped more than 6% in premarket trading Wednesday.

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For the fourth quarter, Uber delivered a strong financial performance, posting $12.0 billion in revenue, a 20% increase from the previous year and slightly above the $11.8 billion analyst forecast.

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The company also saw 18% growth in gross bookings, which measures the total dollar value of rides and orders made through Uber’s platform. Gross bookings came in at $44.2 billion, exceeding the $43.5 billion estimate from analysts polled by FactSet.

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Uber highlighted that in the fourth quarter, it saw accelerating growth across key metrics, including trips, gross bookings, and monthly active platform customers.

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However, Uber’s first-quarter gross bookings forecast fell short of expectations at the midpoint. The company expects bookings to be in the range of $42.0 billion to $43.5 billion, while analysts had projected $43.5 billion.

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A major factor behind this cautious outlook is the impact of a strong U.S. dollar. Uber noted that foreign-exchange fluctuations are expected to create a 5.5-percentage-point headwind in the first quarter.

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Other multinational companies, including Alphabet Inc., Meta Platforms Inc., and Microsoft Corp., have also warned about currency-related challenges affecting their financial outlooks.

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Uber’s forecast for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was between $1.79 billion and $1.89 billion for the first quarter, while analysts had expected $1.85 billion.

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Uber’s stock had a strong run in 2023 but has struggled to gain momentum recently, rising just 1% over the past 12 months.

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One factor weighing on the stock is the progress of Alphabet’s Waymo in the autonomous vehicle space. Investors have been keeping a close eye on the robotaxi industry, as competition in self-driving technology intensifies.

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In the earnings release, Khosrowshahi credited Uber’s success to “rapid innovation and execution across multiple priorities,” including its expansion into autonomous vehicles.

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Meanwhile, Chief Financial Officer Prashanth Mahendra-Rajah emphasized that Uber remains undervalued despite its strong financial fundamentals.

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To reinforce this, Uber initiated a $1.5 billion accelerated share repurchase agreement in January, as part of a broader $7.0 billion stock buyback program previously announced.

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“We plan to be active and opportunistic buyers of our stock,” Mahendra-Rajah said.

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While Uber’s financial performance continues to improve, investor concerns over foreign-exchange headwinds, competition in autonomous driving, and a softer-than-expected outlook for gross bookings have weighed on sentiment.

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With autonomous vehicle development and global expansion among its key priorities, Uber will need to maintain momentum in its core business while navigating external challenges to sustain investor confidence.

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