Uber (NYSE:UBER) is one of this week’s earnings winners. It announced it’s second quarter 2022 earnings earlier today and Wall Street is pleased. Despite reporting a loss of $2.6 billion, the company topped analyst expectations on both revenue and earnings per share. This news has sent UBER stock on a wild ride. As of this writing, it is up almost 17% for the day with only minimal turbulence. Despite a slight dip within the past hour, it already looks poised to continue its upward trajectory. While ride-sharing peer Lyft (NASDAQ:LYFT) is rising in solidarity, UBER stock has gained more.
Let’s take a closer look at the Uber earnings report and what it means for the stock’s future.
UBER Stock: The Road Ahead
It’s not hard to see why UBER stock is surging today. Aside from the noted loss, Uber reported mostly positive earnings for Q2. It exceed Wall Street predictions for both gross booking and mobility gross booking. For delivery gross bookings, it came in slightly below estimates. According to the company, “gross bookings rose 33% year-over-year in the quarter, powered by a 55% jump in its mobility bookings and a 7% boost from its delivery businesses.”
However, Uber also reported EPS of $1.25 per share, a significant bump from the anticipated 25 cents. Most importantly, it reported total revenue of $8.1 billion, an impressive year-over-year (YOY) increase of roughly 105%. It attributes this revenue spike to “changes to its U.K. mobility business model” as well as Uber Freight’s acquisition of transportation and logistics network Transplace. CFO Nelson Chai is optimistic about the company’s long-term growth prospects. As he states:
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. This marks a new phase for Uber, self-funding future growth with disciplined capital allocation, while maximizing long-term returns for shareholders
The performance that we’ve seen from UBER stock today signifies one thing: Markets are much more concerned with company’s positive earnings than its losses. The positive report comes at an excellent time for Uber. While shares have performed well overall, July began with some bad news when the Guardian reported that Uber had engaged in political lobbying and underhanded practices.
This development sent UBER stock down, though it bounced back fairly quickly. More recently, InvestorPlace contributor Larry Ramer issued a bullish take on the stock. As he stated: “It should get a lift from pent-up demand for travel and reduced fears about the coronavirus, while the deceleration of global economic growth should increase its ability to hire drivers at reasonable prices.” Ramer named it one of the best transportation stocks to buy and this earnings report only strengthens his Uber bull thesis.
The Bottom Line
This earnings report indicates that Uber is indeed well positioned to keep rising as it pulls into the third quarter of 2022. It held its ground during a difficult quarter while gas prices rose and travel demand remained uncertain. Now that prices are falling, there is nothing stopping Uber from pulling back onto the road and staying in the green. Just before the earnings report, analyst Bernie McTernan of Needham issued a bullish price target of $50 for UBER stock and reiterated a “buy” rating. “We foresee the company’s Mobility business benefiting from its Uber Pass subscription,” he noted.
Other analysts are likely to issued similar takes following the report. Investors should be watching Uber closely as it prepares for a quarter of growth.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.