Uber’s Strong Quarter Overshadowed by Currency Challenges and Earnings Miss

Quarter Highlights: Uber Technologies Inc. UBER reported what the management termed ‘the strongest quarter ever,’ yet its stock tumbled after the release of fourth-quarter earnings, largely due to foreign exchange issues and an earnings miss.

Results Overview: In the fourth quarter, Uber reported adjusted earnings per share (EPS) of 23 cents, which was a 52.1% miss compared to the forecasted 48 cents according to Benzinga Pro. This led the stock to drop 7.56%, closing at $64.48.

Additionally, the company faced a significant foreign exchange setback, reporting a loss of $1.1 billion, primarily due to the U.S. dollar’s strength against various currencies, notably the Argentine peso, Brazilian real, and Mexican peso.

Looking ahead, the company’s first-quarter gross bookings are anticipated to be affected by ongoing forex challenges, reinforcing concerns over how currency fluctuations could impact anticipated growth.

“We are expecting FX to be a larger topline headwind in Q1,” remarked Prashanth Mahendra-Rajah, CFO of Uber, during the earnings call.

Despite these challenges, Uber’s gross bookings grew by 21% year-over-year, hitting $44.2 billion in the fourth quarter. However, projections for the upcoming first quarter expect gross bookings to fall between $42 billion and $43.5 billion, reflecting a 5.5-point currency headwind.

CEO Dara Khosrowshahi remained optimistic, stating, “Despite FX headwinds, we expect continued strong growth in Q1 with 17% to 21% constant currency gross bookings growth and continued profit expansion.”

Underlying Factors: The rise in the value of the U.S. dollar has been a notable trend since the election of President Donald Trump, accompanied by negotiations on tariffs with key trading partners such as Canada, China, and Mexico.

For the fourth quarter, Uber’s revenue reached $11.96 billion, marking a 20% increase from the previous year. Mobility revenue soared by 25% to $6.91 billion, delivery services grew by 21% to $3.77 billion, while freight revenue remained steady at $1.28 billion.

Moreover, the number of monthly active users climbed to 171 million, up 14%. The company ended the year with $7 billion in cash and cash equivalents and generated $1.7 billion in free cash flow. Khosrowshahi highlighted record user growth, trips, and bookings, underscoring the quarter’s success.

Stock Performance Overview: This year, Uber’s shares have experienced a 2.07% increase. In comparison, the SPDR S&P 500 ETF Trust SPY has seen a rise of 3.35%. Over the last twelve months, Uber’s stock is down by 8.50%, while SPY has gained 22.32%. At the time of this article, the U.S. Dollar Index Spot was up 0.15%, reaching a level of 107.737.

Among analysts, the average price target for Uber is $91.81, based on 34 evaluations, with a consensus ‘buy’ rating. Predictions vary from a low of $77 to a high of $120 per share. Recent evaluations by Needham, UBS, and Cantor Fitzgerald suggest a target of $92.33, indicating a potential upside of 41.99%.

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