Uber is the IBD Stock of the Day, as shares were building on Thursday toward a cup-with-handle pattern buy point. Uber stock was up marginally at the close.
The ride-sharing and food-delivery company's balance sheet went from red to black during the second quarter, as announced in its Aug. 1 earnings report. Uber posted an operating profit of $394 million for the period that ended June 30, compared with a loss of $2.6 billion a year earlier.
Uber faced a long path to its first profitable quarter, losing billions in its first years on the public market.
"For most of our history, profitable wasn't the first thing that came up when you asked someone about Uber," Chief Executive Dara Khosrowshahi said on the company's Aug. 1 earnings call.
Meanwhile, the company's revenue climbed 14% to $9.23 billion. But that came in under analyst expectations of $9.34 billion, according to FactSet. Uber's gross bookings grew 16% to $33.6 billion, ahead of analyst views for $33.49 billion.
Uber stock ended the trading session up a fraction to 46.27 on the stock market today. Shares hit a 52-week high of 49.49 on July 31, the day before earnings, and since have settled into a consolidation shallow enough to be a flat base.
The stock may be forming a handle, with the peak of that handle at 47.70 offering an early entry. So the base could also be interpreted as a shallow cup with handle. Wednesday's high of 46.85 also offers an early entry.
Heading into Thursday, shares have surged 85.6% on the year.
Building A Platform
Khosrowshahi, a former Expedia executive who became Uber's CEO in 2017, has worked to position the company as a platform that provides a range of transportation and delivery services.
That paid off in the early months of the pandemic, when the ride-sharing business tanked amid stay-at-home directives. Uber's delivery sales topped those from the flagship ride-sharing business for the first time in the second-quarter of 2020. That helped stabilize the company's revenue.
Now the ride-sharing business is back in the driver's seat. Sales soared 38% for the division during the quarter to $4.89 billion. Delivery revenue jumped 14% year over year to $3.05 billion.
In 2021, the company launched Uber One, a membership program that offers discounts on food delivery. There also are perks for use of its ride-sharing business.
The company also has focused on lowering spending this year. That reportedly has included layoffs in its recruiting and freight divisions.
Analysts Bullish On Uber
About 94% of the 47 analysts covering Uber hold a buy or overweight rating on the stock, according to FactSet.
Evercore ISI analyst Mark Mahaney recently named Uber its top internet large-cap pick. He has a price target of 75 on the stock.
"UBER was forced very early on in the Covid crisis to take drastic cost actions — actions which helped it attain the FCF (free cash flow) inflection it reached in Q2:22 and the record FCF results of the last four quarters," Mahaney said in a note to clients.
He added: "Further, we believe its Mobility segment is likely to be relatively recession-resistant from a demand perspective (we still gotta commute) and may actually have a recession hedge from a supply perspective (driving is a quick side-hustle for many)."
Meanwhile, Deutsche Bank increased its target price for Uber to 58 from 55 following the company's earnings report.
"We think yesterday's print underscores Uber's scale advantages, its growing local network effects, its multiproduct offering, and its very attractive membership program in Uber One, which we think provides Uber with a durable competitive advantage," Deutsche Bank analyst Benjamin Black said in his post-earnings note to clients.
Uber Stock: Technical Ratings
Uber has lapped its longtime rival in ride-sharing, Lyft. Lyft shares were down roughly 0.5% on the year entering trading Thursday.
Meanwhile, Uber shares hold an IBD Composite Rating of 85, out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one. The best growth stocks have a Composite Rating of 90 or better.
Further, Uber's Relative Strength Rating is 95 out of a best-possible 99. The rating measures a stock's price movement over the last 52 weeks with that of others in IBD's database.
Uber stock has an Accumulation/Distribution Rating of B+. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling
