Uber reports disappointing user growth, food delivery orders

Bloomberg

Uber Technologies Inc disappointed investors with quarterly results showing lackluster gains in bookings and monthly active users, two of the metrics most closely watched by Wall Street.
The ride-hailing company beat estimates for quarterly revenue and loss, improved its annual loss forecast and pledged to turn a profit by 2021. Those weren’t enough to lift the stock, though. Shares were down about 5% in extended trading after the results.
The San Francisco-based company is seeking to assure investors it can evolve from a ride-hailing service to a global all-in-one transportation platform. There could be more pressure on Uber shares when a stock lockup for a large swath of shareholders expires. An additional 1.5 billion shares could be eligible to trade according to Renaissance Capital, nearly doubling the total number outstanding.
Of venture-backed companies, only Alibaba Group Holding Ltd had a larger lockup of 1.6 billion shares.
While Uber’s overall results were good, uncertainty about the possibility of new shares flooding the market cast a shadow that may have depressed share price, said Ali Mogharabi, an analyst at
Morningstar.
“It may be people getting out now, thinking that after November 6 it’ll drop,” he said.
On a conference call with reporters following the report, Uber executives said the company would spend less aggressively and turn an adjusted profit in 2021.
“We will be driving discipline across the company and only doing investments that we can afford,” said Chief Executive Officer Dara Khosrowshahi.
The forecast echoed a commitment from Uber’s smaller rival, Lyft Inc, which said it would be profitable by the fourth quarter of 2021, a year earlier than previously expected. Lyft, which focuses exclusively on transportation, blew past analysts’ third-quarter estimates when it reported results last week.
Khosrowshahi has sought to rein in spending, slicing roughly 1,200 positions from sales and marketing, engineering and product.
Like Lyft, Uber has also cut back on rider discounts and driver incentives in a bid to improve margins and narrow losses.
Khosrowshahi said on the call that Uber would exit markets and dispose of assets where it was clear it could not command No. 1 or No. 2 positions within the next 18 months.
Uber’s business strategy hinges on convincing existing ride-hailing customers to use more services, including bikes, scooters, helicopters and public transportation, as well as food and grocery delivery.
Uber’s newer initiatives, including a job matching service for gig workers in Chicago and financial services for drivers, further demonstrate the company’s grand ambitions.
Since going public in May, Uber investors have punished the company for its growth-at-all-costs strategy. The stock closed Monday at $31.08, well below the $45 IPO price.
Uber ended the third quarter with about $12.7 billion in cash, suggesting it can continue investing in growth where it doesn’t expect continued losses.