Uber Technologies $UBER Up On Positive Free Cash Flow, Analysts Hiking Price Targets

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Uber Technologies $UBER stock rose in morning trade on August 3, 2022, after the company reported its first-ever positive free cash flow and analysts raised price targets.

Uber’s price target raised to $40 from $32 at MKM Partners

On August 3, 2022, MKM Partners analyst Rohit Kulkarni raised the firm’s price target on Uber to $40 from $32 and kept a Buy rating on the shares. The analyst tells investors in a research note that the company’s Q2 saw another clean beat, with the Q3 bookings outlook also bracketing consensus expectations. Kulkarni cites Uber’s impressive first-ever positive free cash flow despite the growing list of macro and micro concerns weighing on the industry.

Uber’s price target raised to $67 from $62 at Truist

On August 3, 2022, Truist analyst Youssef Squali raised the firm’s price target on Uber to $67 from $62 and kept a Buy rating on the shares. The analyst cites the company’s better-than-expected Q2, with the solid ongoing recovery in Mobility and sustained performance in Delivery. The outlook for Q3 also reflects more of the same for Uber with better than expected profitability and growing leverage, increasing his confidence in the management’s 2024 guidance, Squali tells investors in a research note.

Uber’s price target raised to $75 from $69 at Evercore ISI

On August 3, 2022, Evercore ISI analyst Mark Mahaney raised the firm’s price target on Uber to $75. It kept an Outperform rating on the shares after Q2 results and issuance of a Q3 outlook for bookings that “bracketed the Street at the high end” and EBITDA guidance that was well above the Street consensus. A rationalization of driver incentives, growing driver supply, improving operational metrics, expanding Uber One membership, and so far limited macro impacts to the Delivery segment are “creating a powerful combination of premium and sustainable top-line growth AND rapidly scaling profitability,” argues Mahaney, who is raising his estimates following the report and thinks Uber shares “have a LOT more room to run.”

Uber Announces Results for Second Quarter 2022

On August 2, 2022, Uber Technologies announced financial results for the quarter that ended June 30, 2022.

  • Gross Bookings grew 33% year-over-year (“YoY”) to $29.1 billion, or 36% on a constant currency basis, with Mobility Gross Bookings of $13.4 billion (+55% YoY or +57% YoY constant currency) and Delivery Gross Bookings of $13.9 billion (+7% YoY or +12% YoY constant currency). Trips during the quarter grew 24% YoY to 1.87 billion, or approximately 21 million daily trips on average.
  • Revenue grew 105% YoY to $8.1 billion, or 111% on a constant currency basis, with Revenue growth significantly outpacing Gross Bookings growth due to a change in the business model for our UK Mobility business and the acquisition of Transplace by Uber Freight.
  • The net loss attributable to Uber Technologies, Inc. was $2.6 billion, including a $1.7 billion net headwind (pre-tax) relating to Uber’s equity investments, primarily due to aggregate unrealized losses associated with the revaluation of Uber’s Aurora, Grab, and Zomato stakes. Additionally, the net loss includes $470 million in stock-based compensation expense.
  • Adjusted EBITDA of $364 million, up $873 million YoY. Adjusted EBITDA margin as a percentage of Gross Bookings was 1.3%, up from (2.3)% in Q2 2021.
  • Net cash provided by operating activities was $439 million, up $780 million YoY. Free cash flow, defined as net cash flows from operating activities less capital expenditures, was $382 million, up $780 million YoY.
  • Unrestricted cash and cash equivalents were $4.4 billion at the end of the second quarter.

“Last quarter, I challenged our team to meet our profitability commitments even faster than planned—and they delivered,” said Dara Khosrowshahi, CEO. “Importantly, they delivered balanced growth: Gross Bookings up 36 percent to a $116 billion run-rate, Adjusted EBITDA significantly above our guidance, and $382 million in free cash flow, all on a platform that’s larger than ever, with the number of consumers and earners using Uber now both at all-time highs.”

“We became a free cash flow generator in Q2, as we continued to scale our asset-light platform, and we will continue to build on that momentum,” said Nelson Chai, CFO. “This marks a new phase for Uber, self-funding future growth with disciplined capital allocation while maximizing long-term returns for shareholders.”

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📈 Uber $UBER Chart

$UBER has done a downtrend channel breakout, but its momentum from its August 2, 2022 earnings release is rapidly fading. Whether $UBER can stay above its downtrend channel resistance wall remains in jeopardy. At a fundamental macroeconomic level, $UBER stock and its divisions like Uber Eats will experience massive slowdowns as these types of services are primarily driven by consumer discretionary spending.

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