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Uber Oversold Ahead of Earnings

·2 minuto per la lettura

Uber Technologies Inc. (UBER) reports Q3 2021 earnings after Thursday’s close, with analysts forecasting a loss of $0.16 per-share on $4.41 billion in revenue. If met, earnings-per-share (EPS) will mark 25% of the loss posted in the same quarter last year, when folks avoided ride-share to lower infection risk. The stock rose 3.0% in August after beating Q2 guidance but has added just three points since that time, with structural issues continuing to impact ridership.

Ride-Share Headwinds Persist

Rival Lyft Inc. (LYFT) eased bearish sentiment earlier this week, beating Q3 top and bottom line estimates, but the comparison may not be accurate due to Uber’s major exposure to food delivery, which is now growing at a slower pace due to the resumption of normal day-to-day activities. That venue has become overcrowded as well, at the same time that some municipalities are setting fee limits and restaurants are looking for cheaper alternatives.

Uber raised Q3 earnings guidance in September but the subsequent uptick fizzled out because concerns persist about driver shortages and legislative threats to reclassify workers. The financial press has picked up on this chronic negativity, with a recent New York Times article entitled “For Uber and Lyft, the Rideshare Bubble Bursts” while Business Insider is reporting that neither company has achieved the promised increase in drivers, especially during peak periods.

Wall Street and Technical Outlook

Wall Street consensus has remained wildly bullish despite obvious headwinds, yielding a ‘Buy’ rating based upon 36 ‘Buy’, 4 ‘Overweight’, 4 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $35 to a Street-high $82 while the stock is set to open Thursday’s session $24 below the median $70 target. This weak placement highlights investor skepticism about Uber achieving sustained profitability and overcoming legislative challenges.

Uber came public in the 30s in 2019 and sold off to the mid-teens during 2020’s pandemic decline. The subsequent uptick reached the IPO opening print in November, yielding a breakout that posted an all-time high at 64.05 in February. Lower highs and lower lows since that time have relinquished 30% of the stock’s value while price action has failed two tests at the 200-day moving average, which was broken in May. However, monthly relative strength readings have eased off extremely oversold levels, favoring intermediate upside into the low 50s.

For a look at today’s economic events, check out our earnings calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 


This article was originally posted on FX Empire


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