Uber investors struggled to grasp its Q4 earnings, reflecting company's uncertain road to profitability
- Uber's after-hours stock movement Wednesday highlighted uncertainty around its Q4 earnings report.
- Uber beat on earnings but fell short on revenue as food delivery failed to offset ride-hailing losses.
- Uber must navigate a long list of unknowns to overcome the pandemic and become profitable.
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Uber reported its Q4 2020 earnings on Wednesday, and its mixed results highlighted the uncertain road ahead for the company, which has yet to turn a profit in its twelve-year history.
Uber beat Wall Street's earnings expectations, losing $0.54 per share versus estimates of $0.55 - but it fell short on revenue, with $3.17 billion versus an expected $3.58 billion.
Wedbush analyst Dan Ives told CNBC on Wednesday that Uber was "the poster child for a recovery play," while Morningstar's Ali Mogharabi told the network that, "in terms of the top line, there's so much uncertainty there."
On Uber's earnings call, investors pressed CEO Dara Khosrowshahi and other executives about everything from post-pandemic travel trends, to the company's ongoing fight to keep drivers classified as contractors, to whether and when the company will be profitable.
Uber shares rose and fell multiple times before settling down nearly 5% in after-hours trading Wednesday. By midday Thursday, the stock was down 2% after some early-morning turbulence.
All businesses face some level of risk and uncertainty, but investors' wide-ranging questions and their initial struggle to process Uber's earnings report showed the best way forward for the $117 billion company is far from clear.
Here are a few aspects of Uber's roadmap that investors are trying to wrap their heads around.
The future of food, rides, travel
Uber's food-delivery revenue jumped 130% year-on-year, but it wasn't enough to offset the company's pandemic-stricken ride-hailing business, which remained down 50% year-on-year even as it rebounded slightly from Q3.
As the pandemic forced consumers to switch up their habits, Uber doubled down on the success of Uber Eats by acquiring Postmates and Drizly, while jettisoning its struggling autonomous vehicle research, flying taxi, and e-bike businesses.
But the future of Uber's ride-hailing and food-delivery businesses depend heavily on how quickly the US and other countries are able to vaccinate people and drive down COVID-19 cases - and whether consumers return to their old habits or stick with new ones.
"There's still a question as to whether or not the strong demand for online food delivery is going to last even after the economy recovery," Mogharabi told CNBC, adding that Uber's revenue growth could slow if that demand tapers.
As for Uber's rideshare business, while public transit faces an uphill battle getting riders back safely, car ownership rates have surged during the pandemic as millennials and Gen Z move away from cities and more companies embrace work-from-home policies.
Some travel industry executives, like Airbnb CEO Brian Chesky, have predicted that business travel won't ever return to pre-pandemic levels, but Khosrowshahi told investors he believes "external business travel" - such as salespeople flying somewhere to land deals in person - will bounce back "very quickly."
Even though the number of users on Uber's platform dropped by 16% in Q4 2020 from the previous-year quarter, it's making more money from each of them, and Khosrowshahi repeatedly touted Uber's membership growth to five million members worldwide.
Still, the sheer number of variables make it difficult to tell who will jump back on Uber, when they will, how much money they'll spend on Uber's various services, and whether the company can ultimately figure out how to make those services profitable in the long-run.
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