Uber Technologies Inc (UBER.N), said Wednesday that it does not need to raise incentives to attract drivers. It also forecasts a strong second-quarter, one day after Lyft stated it needs to spend more on jobs.
After shares of Lyft Inc. (LYFT.O) dropped 26% on Tuesday, the transportation giant announced its results Wednesday morning. The expected operating profit was below expectations for a driver pay increase. This caused Uber shares to plummet.
Uber shares fell by 9% in the early trading. Analysts believe investors are buying shares of money-losing businesses whose consumer-facing businesses may be under more pressure due to rising inflation.
“Uber has more diverse revenue sources, looking at Uber Eats,” stated Ross Mold, Uber’s chief investment officer. However, Lyft’s issues could also impact Uber, especially on the cost side.
Lyft stated Tuesday that it will need to invest more in order to balance demand and supply in the coming quarters. This would further reduce its already low operating profit. Lyft shares are down 30% in morning trades, losing more than $3.2 million of market value since Tuesday’s close.
Uber reported on Wednesday that it had seen a decline in monthly active users over the past quarter. This is a typical trend in the industry in the winter months. However, Uber was determined to stand out from its smaller competitor. .
“I believe I heard last night that one our competitors in America is facing challenges,” Uber CEO Dara Kosrowshahi said to analysts during a post earnings call. He was referring specifically to Lyft.
Khosrowshahi stated that Uber’s driver base is at its highest point since the pandemic and that it expects this trend will continue, even if there are no significant stimulus investments.
Hargreaves Lansdown analyst Susanna Streeter said that Uber has been able attract and retain drivers by offering profit opportunities on rides as well as food delivery during the pandemic.
Streeter stated that investors have felt some relief that Uber is not in the same weak spot as it was in terms of offering strong incentives to attract drivers back.
Uber executives stated that drivers who commute more than 20 hours per week earned an average $39 an hour, which includes tips and fuel surcharges. Lyft reported Tuesday that the average driver’s earnings for March was $24, which includes tips, but excludes a 55 percent fuel surcharge per ride.
Uber reported an adjusted EBITDA of $168 million for its first quarter. This excludes stock-based compensation. According to Refinitiv’s IBES data, this beat the average analyst expectations of $132 millions.
Analysts were also pleased with the company’s guidance for second quarter.
The pandemic saw ride-sharing revenue plummet, and now it exceeds delivery revenue. This is a sign that travel is recovering. Uber reported that total Uber ride bookings exceeded levels reached in 2019 in all global markets.
Uber Eats customers continued to order food delivery from restaurants despite the return of riders.
Uber stated that it expected to generate significant positive cash flow for the entire year. This would be the first time Uber has ever achieved this goal in its 13-year history.
However, Uber’s net loss for the first quarter was $5.9billion, compared to $108m last year. This was due to $5.6billion in share writedowns by other underperforming companies led by Didi Global Inc. (DID IN).
Nelson Chai, Uber’s chief financial officer, stated that Uber has enough cash to wait until a better time to buy and to stay in losing positions.