Uber Q4 preview: Where next for Uber stock?

When will Uber release Q4 earnings?

Uber is scheduled to publish fourth quarter earnings on Wednesday February 9.

Importantly, Uber is holding its investor day on Thursday February 10, when management are expected to divulge more information on the company’s long-term strategy, insight into how it plans to spend its cash, and hold a Q&A session with analysts and institutional investors.

Uber Q4 earnings preview

Uber hit a milestone when it released its last set of results after delivering its first-ever quarterly profit at the adjusted Ebitda level since going public back in 2019 – some 18 months ahead of plans - raising hopes it is finally starting to reap hard-earned rewards after years of investment and that it can finally become self-sustaining.

Uber said it was aiming to deliver its second consecutive quarter of positive adjusted Ebitda of between $25 million to $75 million in the final three months of 2021. Analysts forecast Uber will hit the upper-end of that range with Ebitda of $63.6 million.

Uber said it was aiming to deliver gross bookings of $25 billion to $26 billion but analysts are more bullish and believe it will deliver $27.3 billion in gross bookings, driven by the recovery of its ride operation and continued growth from its delivery arm, albeit at a much slower rate than it has delivered over the past year during the pandemic-induced boom.

Wall Street forecasts Uber will report revenue of $5.4 billion as a result, which would comfortably mark a post-pandemic high and be up 68% from the year before.

This is expected to be the fourth consecutive quarter of bookings growth for its core ride-hailing operation (which Uber calls Mobility), which has been steadily recovering as travel restrictions ease and people get out and about once again.

The ride-hailing side of the business, which managed to remain in the black at the Ebitda level throughout the tough times of the pandemic, is also forecast to report its sixth consecutive quarter of improved earnings, although they are set to remain below pre-pandemic levels. Notably, higher prices are largely being countered by the extra amounts being paid to entice drivers back to the platform.

Importantly, its main rival in the US, Lyft, reports quarterly earnings the day before on Tuesday – and this could provide an insight into how Uber’s ride-hailing service performed in the period. Analysts are expecting Lyft to report 59% year-on-year growth in active riders to 20.0 million in the quarter, a 65% increase in revenue to $940.4 million and adjusted Ebitda of $75.7 million.

The key to Uber’s move into profitability has been the gradual move toward the breakeven point by the Delivery segment responsible for shifting food and groceries to customer’s doors. Analysts believe the division remained in the red in the quarter, although Uber has a chance to surprise the market with a profit.

Bookings are expected to hit new records as more people embrace ordering food and other goods to their doors, although growth is deaccelerating. Bookings are forecast to rise over 35% year-on-year in the quarter, but that would still be the slowest rate of growth delivered since it went public. The slowdown reflects the easing of restrictions encouraging people to eat out more and fiercer competition in the food delivery space.

Where next for Uber stock?

Uber shares were at their peak almost exactly one year ago but have suffered a 40% fall since then, hitting a 17-month low last week as it briefly sank below the $33 mark as it continues to experience a rough ride in early 2022.

A potential head and shoulders formation is on the cards after starting to surface in December. However, we would need the stock to sink below the recent floor of $32.80 (also a key floor throughout September and October 2020) to be confirmed, which would then bring $28 into view. A potential move lower is reinforced by the bearish RSI and the state of the moving averages, with the 50-day below the 100-day, which is in turn below the 200-day.

However, any move above the right shoulder’s peak of $38.70 would negate the head and shoulders and put it on course to recapture the 50-day sma at $39 and then the 100-day sma at $42. A move above the 200-day sma at $44 would be more significant considering this has proven to be the ultimate ceiling for the stock over the past six months.

Brokers are extremely bullish on Uber’s prospects and believe it is highly undervalued. The 48 brokers covering the stock have an average Buy rating and a target price of $65.10 – some 74% above the last closing share price and implying there are fresh all-time highs on the cards over the next 12 months. That is supported by the view that Uber is in a far better position today than it was a year ago when its valuation peaked considering both sides of the business continue to gain momentum and a profitable future is now firmly in Uber’s grasp.

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