Uber Shares Slide 9.29% Despite Strong Q3 Profit Amid Rideshare Booking Shortfall

On October 31, Uber faced a significant decline of 9.29%, hitting its lowest intraday price since September 2024. Despite recording a robust operating profit for the third quarter of 2024, Uber's results revealed a rideshare booking volume below expectations and conveyed a moderate outlook for the holiday season. The company reported a third-quarter revenue of $11.2 billion, marking a 20% increase year-over-year and surpassing market forecasts. However, this announcement led to a 6% drop in Uber's pre-market stock, alongside a similar 2% dip in the stock price of its smaller competitor, Lyft.

Uber's net income was noted at $2.6 billion, with $1.7 billion of this resulting from pre-tax gains due to the revaluation of equity investments. Operating income surged by 169% to reach $1.06 billion, and earnings per share rose to $1.20, up from $0.10 in the previous year. Nonetheless, currency exchange headwinds posed challenges to the rideshare segment. Uber's total bookings for the quarter summed to $41 billion, just slightly below the midpoint of the company's guidance range, missing Wall Street's forecast of $41.2 billion.

Investments in emerging areas of ride-hailing and delivery services have been pivotal for Uber in both the US and international markets, fostering robust growth. The company expanded its transportation options over the past year, integrating taxis, rideshares, and shuttle services to and from airports into its platform. Uber has also extended its reach to suburban areas worldwide and courted a new demographic through accounts tailored for teenagers.

Strategic agreements with new Uber Eats partners like H Mart, Michaels, and JD Sports have broadened service offerings beyond restaurant deliveries, thereby enhancing order frequency. In the fourth quarter, Uber projects bookings of $42.75 billion to $44.25 billion, slightly short of analysts' expectations set at $43.7 billion. The company anticipates an adjusted EBITDA between $1.78 billion and $1.88 billion, reflecting a growth of 39% to 47%, with the midpoint also trailing market anticipations.

CEO Dara Khosrowshahi underscores the "huge opportunity to increase consumer penetration," by venturing into less densely populated markets, emphasizing early signs that fast, on-demand services are becoming habitual for more consumers. CFO Prashanth Mahendra-Rajah noted the company's year-to-date performance should bolster investor confidence in fulfilling commitments by 2026.

Throughout this year, Uber boosted subscriptions for its Uber One program by offering discounts to university students across the United States and Canada. The company reported a 70% increase in membership over the past year, surpassing 25 million, with these members spending over three times more monthly compared to non-members.

This expanded consumer and merchant base has reciprocally catalyzed growth in Uber's nascent advertising segment, which witnessed a near 80% year-over-year rise, contributing to adjusted earnings for the period exceeding expectations.