Uber investors await recovery plan in first earnings after IPO

The Uber Technologies Inc. application is displayed in the App Store on an Apple Inc. iPhone in an arranged photograph taken in Arlington, Virginia, U.S. on Monday, April 29, 2019. Photographer: Andrew Harrer/Bloomberg

Uber Technologies Inc. will get its first opportunity to address some of the concerns that contributed to a rocky Wall Street debut when it reports first-quarter earnings on Thursday afternoon.

The ride-hailing giant’s shares have languished since trading began on May 10 as investors focused on how much money it’s losing, intense competition and shrinking revenue growth. The stock has fallen 11% from the $45 offering price, and investors want to know what Chief Executive Officer Dara Khosrowshahi has planned to instill confidence in Uber’s long-term strategy.

“This week marks an important step forward for Dara & his team to prove to the Street that this business model is still in the early stages of playing out,” Wedbush analyst Ygal Arounian wrote in a research note.

The first-quarter net loss is expected to be $1.0 billion to $1.11 billion on revenue of $3.04 billion to $3.10 billion, the company said in a regulatory filing on May 13. With preliminary results already disclosed, investors will be watching for commentary and forecasts, although there’s some confusion about which metrics the San Francisco-based company will project.

“It remains unclear to us what type of forward guidance Uber plans to regularly give,” wrote D.A. Davidson analyst Tom White. Any weakness in revenue growth over the next few quarters will probably intensify questions around the “true size” of the total addressable market, he said.

Aside from revenue growth, the biggest focus will probably be on profitability for Uber’s core ride-hailing service after direct expenses, according to Cross Research. Uber’s so-called core platform contribution margin was negative 4% to 7% in the first quarter, according to the preliminary results.

“We see the Street paying close attention to discussion around core platform contribution profit trends, given the recent deterioration in this metric and questions regarding Uber’s ride-sharing ongoing unit economics,” analyst Steven Fox said.

Options set to expire on Friday show an implied move of about 7% for Uber shares. Those contracts show an implied volatility of about 118% versus options expiring one week later trading at 72% as investors anticipate additional share price swings around the earnings report.

Short interest as a percentage of shares available to trade is 23%, up from 18% a week ago, according to data from S3 Partners.