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Sunday, December 5, 2021

Uber Stock Rises As Third Quarter Profitability Is Expected

Uber Technologies’ stock rose substantially Tuesday after the app-based ride-sharing and delivery company said it expected to turn a profit in the third quarter.

Uber (ticker: UBER) stated that adjusted earnings before interest, taxes, and depreciation could range from a loss of $25 million to a profit of $25 million, which is better than the earlier projection of “a loss of $100 million.” According to the corporation, there have been “improvements in both mobility and delivery.”

Gross bookings for the third quarter are expected to range between $22.8 billion and $23.2 billion, up from a previous range of $22 billion to $24 billion.

Uber now forecasts adjusted Ebitda of between $0 and $100 million in the fourth quarter, down from its previous forecast of “adjusted Ebitda profitability.”

“They say that adversity generates opportunity, and that has certainly been the case for Uber over the last 18 months,” said CEO Dara Khosrowshahi. “Thanks to the team’s tireless efforts, we have not only increased our global leadership in Mobility and Delivery, but we have done so more profitably than ever before.

“As a result, Uber has passed a significant milestone,” he continued.

MKM Partners analysts are “more bullish” on Uber shares, despite bookings guidance being in line with Wall Street estimates. MKM highlighted an increase in the daily run-rate of Covid-19 instances in the United States, as well as Uber’s assertion that it had positive Ebitda in July and August.

MKM recommends UBER stock as Buy with a price goal of $68; forty-three analysts polled by FactSet rate the stock as Buy with an average price target of $66.85.

While Uber’s outlook has improved, the issue of how to classify its drivers remains unresolved. A California judge ruled that legislation allowing firms to categorize drivers as contractors rather than employees was unconstitutional.

In a ruling issued on Friday, Superior Court Judge Frank Roesch declared Proposition 22, which was approved by voters in November, to be unenforceable and illegal. Uber, Lyft, DoorDash (DASH), and other app-based corporations spent more than $200 million to support Proposition 22, which exempted their businesses from state law’s requirement that drivers be treated as employees. When 58 percent of California voters supported the bill, it was approved.

 

Uber shares were rising 7.25% in premarket trading to $42.68 and up to $43.55 after the market opening. The stock has declined almost 17% so far in 2021 but has gained 23% over the past year.

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