Uber Earnings Crush Estimates. Why the Stock Is Getting Slammed.

The ride-hailing company posted better-than-expected quarterly earnings and revenue. (Mario Tama/Getty Images)

Key Points

• Uber Technologies falls even as it exceeded third-quarter earnings expectations.
• The company reports earnings of $3.11 a share, significantly above the 69 cents consensus estimate.
• Revenue reaches $13.5 billion, a 19% increase on a constant currency basis, surpassing Wall Street’s $13.3 billion forecast.

Uber Technologies stock fell sharply Tuesday after the ride-hailing company’s third-quarter earnings beat expectations, in large part due to one-time tax and investment benefits.

The company posted earnings of $3.11 a share for the quarter, ahead of analysts’ consensus estimates of 69 cents. Revenue totaled $13.5 billion, up 19% on a constant currency basis from a year earlier and above Wall Street’s call for $13.3 billion.

Gross bookings of $49.7 billion also surpassed forecasts for $49 billion, with better-than-expected results across both ride-hailing and Uber Eats.

The massive earnings beat was down to a $4.9 billion benefit from a tax valuation release and a $1.5 billion pretax benefit from revaluations of the company’s equity investments.

Uber stock fell 6.4% on Tuesday. Shares have climbed 65% this year as of Monday’s close. The company was a Barron’s stock pick in March.

Investors likely were disappointed by Uber’s profit once the tax and investment benefits were stripped out. The company reported income from operations of $1.1 billion, short of analysts’ call for $1.6 billion. A significant uptick in general and administrative expenses compressed profit.

The stock may also have been a victim of its own success. William Blair analyst Ralph Schackart argued the pullback was likely due to high expectations coming into the quarter.

“The business continues to perform well with accelerating growth,” Schackart wrote in a research note Tuesday. The firm has an Outperform rating on Uber stock.

Uber guided gross bookings of $52.25 billion to $53.75 billion for the fourth quarter, narrowly ahead of Wall Street’s forecast. It expects adjusted earnings before interest, taxes, depreciation, and amortization of $2.41 billion to $2.51 billion, which would be in line with estimates.

Looking further out, investors will be closely tracking the deployment of autonomous vehicles, or AVs, on Uber’s network amid growing competition from Tesla. Uber expects to be live with AVs in at least 10 cities throughout the U.S., Middle East, and Europe by the end of 2026, said CEO Dara Khosrowshahi in prepared remarks.

“We are building out a suite of capabilities that maximize AV fleet profitability—from charging infrastructure and fleet management, to financing and customer support,” Khosrowshahi added.

Last month, Uber and the chipmaking giant Nvidia announced a partnership to build a fleet of 100,000 autonomous robo-taxis using Nvidia technology.

“Obviously, if there’s one ally you want in the world in terms of AI or autonomous, it’s NVIDIA,” Khosrowshahi said on Tuesday’s conference call.

Shares of Lyft, which also is competing with Uber for AV supremacy, were down 4.5% on Tuesday. The S&P 500 slipped 0.9% and the tech-heavy Nasdaq Composite fell 1.5%.

Write to Nate Wolf at nate.wolf@barrons.com