Buckle up, people, we're taking off at Uber speed.
The ride-sharing and delivery platform Uber Technologies (UBER) delivered some nice numbers to Wall Street on Aug. 6, meeting second-quarter earnings forecasts and beating revenue estimates.
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The San Francisco company also plans a $20 billion stock buyback, which Chief Financial Officer Prashanth Mahendra-Rajah said in a statement “underscores our confidence in the business, following yet another quarter of strong top and bottom-line performance.”
“Q2 was another quarter of new records for Uber as we achieved all-time highs in both audience and frequency,” Chief Executive Dara Khosrowshahi told analysts during the earnings call.
“We’ve already made great progress harnessing the unique power of our platform to foster deeper engagement with our consumers, who visited our apps nearly 30 billion times over the past 12 months. But we’re just scratching the surface of what’s possible.”
While Uber remains as focused as ever on its core business, Khosrowshahi said, “we continue to push forward on building the future with [autonomous vehicles] — and Q2 was jam-packed.”
He said the company expanded its operating zones in Austin with Alphabet (GOOGL) subsidiary Waymo and in Abu Dhabi with WeRide. And it launched exclusively with Waymo in Atlanta.
Uber CEO: Ramping up AV deployments
Uber has also partnered with electric vehicle maker Lucid (LCID) and Nuro, a robotics and autonomous-vehicle-tech company, to form a global robotaxi program.
“Our autonomous momentum continues at Uber speed, and we’ll be ramping those deployments significantly over the next few quarters in the U.S. and internationally,” Khosrowshahi said.
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He added that commercializing autonomous vehicles would take time, “but we’re going to be in the lead in terms of commercialization.”
“Austin launch continues to go really well in terms of utilization,” he said. “It’s early, but the Atlanta launch has been great. And in both cases the average Waymo is busier than 99% of our drivers in terms of completed trips per day.”
Now, despite the talk of Uber speed, Wedbush analysts Scott Devitt and Matthew Weiss called the company an “AV laggard” as they knocked a dollar off their stock price target to $84 while maintaining a neutral rating on the shares.
“While we recognize that Uber’s management team has demonstrated a successful track record of execution across key initiatives to drive growth in recent years,” the analysts said, “we maintain our neutral view due to the limited potential for further beats versus investor expectations and the eventual impact of AV disruption on established ride-sharing networks as the industry evolves.”
Uber has done a great job of positioning itself as a beneficiary of expansion with Alphabet's (GOOGL) Waymo, but the analysts said the recent Lucid-Nuro partnership further validates their hypothesis that the company's evolving approach to protect its value proposition will likely put its relationship with Waymo at risk.
“We think the AV debate could weigh on [the] shares, and we disagree with Uber management that autonomous vehicles will prove to be a fragmented industry,” the analysts said.
Analysts say Uber seems to be in a pickle
Devitt and Weiss said that physical AI requires massive scale and data collection, so that only a few will be able to successfully deploy the proper technology required to offer safe rides to consumers.
“In the U.S., it is likely to be Waymo and Tesla,” (TSLA) they said. “Waymo seems to have long-term ambitions that are in conflict with Uber, and Tesla has stated it can go it [alone. This] leaves Uber in a pickle.”
Related: Analysts rework Uber stock price target on autonomous vehicle expansion
Tesla (TSLA) launched its robotaxi service with limited invite-only rides in Austin on June 22.
Looking ahead, the analysts said that either autonomous vehicles don’t scale, leaving the status quo intact and Uber will prosper; or they will scale, creating an entirely new world of transportation and Uber will struggle.
“We subscribe to the latter scenario,” they said.
BMO Capital raised its price target on Uber to $113 from $101 and affirmed an outperform rating on the shares after the earnings beat estimates, according to The Fly.
What the investment firm called Uber's “robust” delivery growth accelerated 2 percentage points to 20% excluding foreign-exchange factors.
The $20 billion share-repurchase authorization is also “encouraging,” with a $23 billon remaining buyback representing 12.5% of Uber's market cap, BMO added.
And Truist boosted its target on Uber to $96 from $92 and reiterated a buy rating.
Uber's results were stronger than expected and the Q3 outlook reflected very healthy demand across mobility and delivery, Truist argued.
The company executed well against its three-year guide for a compounded annual growth rate of gross bookings of mid-to-high-teens percent; and adjusted-Ebitda CAGR of high 30% to 40%, the investment firm said.
The outperformance was driven by further acceleration in delivery gross bookings, while mobility sustained a solid trend with trips growth accelerating in July, Truist said.
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