Uber Technologies' (UBER -3.44%) stock surged 11% on Sept. 21 after the ride-hailing and food delivery company updated its guidance for the second half of 2021.

For the third quarter, Uber narrowed its bookings guidance and boosted its adjusted EBITDA guidance. It now expects to generate $22.8 to $23.2 billion in gross bookings, compared to its prior forecast of $22 to $24 billion. It expects its adjusted EBITDA to come in between a loss of $25 million and a profit of $25 million, which is much higher than its previous forecast for an adjusted EBITDA loss of $100 million.

For the fourth quarter, Uber expects to generate an adjusted EBITDA of $0 to $100 million, which would represent Uber's first quarterly profit on an adjusted EBITDA basis. CFO Nelson Chai said Uber's adjusted EBITDA turned positive in July and August, and should improve sequentially in the fourth quarter.

An Uber driver picks up a passenger.

Image source: Uber.

Those improvements were driven by the recovery of its ride-hailing business as COVID-19 restrictions were relaxed, as well as cost-cutting measures and the divestments of several unprofitable divisions. But does Uber's updated guidance offset its other problems and make it a worthwhile investment?

How did Uber fare during the pandemic?

Uber's revenue declined 14% to $11.1 billion in 2020 as the pandemic kept people at home and away from its ride-hailing services. Its mobility (primarily ride-hailing) revenue fell 43% to $6.1 billion.

The company's delivery (Uber Eats) revenue surged 179% to $3.9 billion as more people relied on food deliveries during the pandemic, but that growth couldn't offset its loss of ride-hailing passengers.

On an adjusted EBITDA basis, Uber's mobility segment is consistently profitable, but its delivery segment isn't. The mobility segment's adjusted EBITDA fell 44% to $1.2 billion in 2020, while the delivery segment's adjusted EBITDA loss narrowed year-over-year from $1.37 billion to $873 million. The company's total adjusted EBITDA loss narrowed slightly, from $2.73 billion to $2.53 billion.

How quickly is Uber's business recovering?

In the first half of 2021, Uber's revenue rose 32% year-over-year to $6.8 billion. Its mobility revenue dipped 24% to $2.5 billion, but the business returned to growth in the second quarter. Its delivery revenue increased 162% to $3.7 billion as Uber Eats continued to expand.

The company's total number of monthly active platform customers (MAPCs), trips taken, and gross bookings also rebounded sharply in the first and second quarters of the year.


FY 2020

Q1 2021

Q2 2021


93 million

98 million

101 million

Growth (YOY)





5.03 billion

1.45 billion

1.51 billion

Growth (YOY)




Gross Bookings

$57.9 billion

$19.5 billion

$21.9 billion

Growth (YOY)




Source: Uber SEC filings. YOY = Year-over-year.

Uber notably closed its takeover of Postmates to expand Uber Eats last December, and it sold its ATG (advanced technologies group) -- which primarily developed driverless vehicles -- to Aurora for about $4 billion this January. Uber's unprofitable ATG unit reduced its adjusted EBITDA by $375 million in 2020, so the divestment helped it narrow its losses at a faster rate.

Uber's adjusted EBITDA loss narrowed year-over-year, from $1.4 billion to $868 million, in the first half of 2021. The mobility segment's adjusted EBITDA declined 24% to $477 million, but the delivery segment narrowed its adjusted EBITDA loss from $545 million to $361 million.

Uber expects its recovery to continue (but roadblocks remain)

Uber's guidance for the third quarter implies its gross bookings will increase 55%-57% year-over-year.

Its adjusted EBITDA outlook also indicates its mobility business will regain its pricing power as the pandemic passes and more people hail rides again. Uber's rival Lyft (LYFT -2.36%) also posted its first adjusted EBITDA profit in August, so the ride-hailing market is clearly heating up again.

Wall Street expects Uber's revenue to rise 45% this year and 41% next year, and for its GAAP losses to narrow in both years. Based on those estimates, its stock trades at just 5.2 this year's sales. Lyft, which is growing at a slightly slower rate than Uber, trades at 5.5 times this year's sales.

Uber's stock looks cheap, but it still faces two potential roadblocks. First, a California judge recently struck down Proposition 22, a controversial ballot initiative that exempted Uber, Lyft, and other platforms from classifying their drivers as full-time employees. Uber is appealing the ruling, but it could be forced to either comply with the new rules or leave California.

Second, the Delta variant's spread across the U.S. and other countries could halt Uber's recovery. If new COVID-19 restrictions are implemented, Uber's rosy expectations for the rest of 2021 could crumble.

Is Uber worth buying?

Uber's business is recovering and its stock looks undervalued, but it still faces too many unpredictable headwinds. I'd rather pay a premium for other growth stocks than roll the dice on Uber right now.