What happened
Shares of Uber Technologies (UBER 1.75%) were rolling higher last month as the ridesharing giant seemed to turn the corner in its recovery from the pandemic and its quest to deliver consistent profitability.
The company posted better-than-expected revenue in its second-quarter earnings report, and finished the month up 23%, according to data from S&P Global Market Intelligence.
As you can see from the chart below, the stock jumped on its earnings report in early August and mostly held those gains even as the broad market pulled back in the second half of the month.
So what
The stock rose 18.9% on Aug. 2 after the company reported second-quarter results. Gross bookings increased 33% to $29.1 billion, and revenue jumped 105% to $8.07 billion due to a change in its business model in the U.K. and its acquisition of Transplace, a logistics technology company. That revenue result easily beat the analyst consensus at $7.39 billion.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), the company's preferred metric for profitability, showed strong improvement, rising $873 million to $364 million as pandemic headwinds faded. The company also posted $382 million in free cash flow, compared to a loss of $398 million in the quarter a year ago, showing it's gone from burning cash to generating it.
NYSE: UBER
Key Data Points
Management expects a modest sequential improvement in the third quarter, calling for $29 billion to $30 billion in gross bookings and adjusted EBITDA of $440 million to $470 million.
Analysts cheered the report, with a number of them raising their price targets and giving upgrades to the stock, touting momentum in the mobility division and rising EBITDA leverage.
Over the duration of the month, Uber benefited from positive analyst chatter, and announced several new partnerships with companies like The Body Shop, Office Depot, and ADT.
While the stock declined in the second half of the month, it still fared well compared to most growth stocks as comments from Fed Chair Jerome Powell about sustained high interest rates pushed stocks lower toward the end of August.
Now what
Uber might finally be starting to fulfill the vision investors had for the company when it went public in 2019. It has faced multiple scandals over its history, overspent in its early years, and was dealt a setback from the pandemic. But with EBITDA and free cash flow reaching run rates greater than $1 billion, there's a much better case for the stock than there was a few years ago.
Uber still needs to prove it can grow once the recovery tailwinds fade, but it's easy to see why investors responded well to the latest report.
