Uber Bears Already Snapped Up 70% of Shares Available to Short

May 28, 2019

Want to bet on losses in Uber Technologies Inc.? The number of shares available to do that is starting to run low.

The ride-hailing company has been public for less than a month, but bears have already moved in on almost 70% of the shares that can be lent out for short selling, data compiled by IHS Markit show. That’s up from 50% on May 15, days after Uber’s trading debut.

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While Uber’s post-debut decline is less than half that of Lyft, it’s seen a bigger increase in short interest, particularly over the past week. Last week, Uber’s short interest more than doubled to 36 million shares, while Lyft’s went from 21.7 to 23 million shares, according to data compiled by IHS Markit.

That’s out of sync with sell-side analyst calls. Four of those covering Uber recommend buying the stock, while five say hold and none recommend selling. Lyft has 16 buy, seven hold and two sell recommendations.

Since Uber's rocky debut, analysts have struck measured notes on the stock's outlook heading into earnings. For the quarter, analysts are expecting a loss of 76 cents per share on earnings of $3.08 billion, according to FactSet. In its initial IPO paperwork, Uber disclosed that it expects to post a $1 billion loss for the first quarter.

Here’s a snapshot of Wall Street’s expectations and some recent history.

• Uber has an average analyst rating of Overweight, according to FactSet. Analysts expect an adjusted net loss of $1.08 billion for the first quarter and revenue of $2.98 billion. Wall Street expects an adjusted loss of $1.26 a share, according to Bloomberg.

• Uber has said in filings with the Securities and Exchange Commission it expects a net loss between $1 billion and $1.1 billion for the quarter ended March 31. The company expects to report revenue between $3 billion and $3.1 billion, compared with $2.6 billion in the year-ago quarter. The company chalked up part of the loss to “continued investment in our Core Platform,” like incentives and promotion spending.

Uber thinks price war with Lyft may be ending, and both stocks are headed higher

May 30, 2019

Uber reported first-quarter losses of $1.01 billion, or $2.26 a share, on revenue of $3.1 billion. Shares bounced around between slight gains and losses in after-hours trading until executives provided what passes for a forecast from Uber in a conference call and said that the pricing war was easing.

Uber issued a very limited forecast, with Chief Financial Officer Nelson Chai saying “core platform adjusted net revenue” — a figure that ignores noncore businesses and strips out any driver incentives — and contribution margins will improve in the second quarter from the first and continue that pattern through the end of the year. The company did not provide a forecast for any traditional metrics.

Uber disclosed ahead of the IPO that it expected to lose at least $1 billion and up to $1.11 billion in the first quarter, on net revenue of $3.04 billion to $3.1 billion. In the year-ago quarter, Uber reported massive earnings of $3.75 billion on revenue of $2.58 billion, though that outsize profit was linked to the sale of some of its international operations, with a stated operational loss of about half a billion dollars in the year-ago quarter.

“Our Q1 2019 results were at or near the high end of the ranges we shared last month in our IPO prospectus,” Chai said in the earnings announcement. “Our investments remain focused on global platform expansion and long-term product and technology differentiation, but we will not hesitate to invest to defend our market position globally.”

Not enough analysts projected Uber’s first-quarter earnings to form a solid consensus for this report. Analysts for banks that underwrite an initial public offering tend to wait 25 days from the offering before initiating coverage of a stock, and most of Wall Street helped out on Uber’s IPO, which listed an astounding 29 banks as underwriters. Expect a wave of Uber initiations next week with analysts’ thoughts on this earnings report.

Uber reported bookings — which represents the total amount of money spent on the Uber platform, instead of just the part that Uber takes and is counted as revenue — of $14.65 billion, up from $10.9 billion a year ago. Uber said in its pre-IPO disclosure that it expected gross bookings of $14.44 billion to $14.66 billion, with about 78% of that total attributed to its ride-sharing platform and most of the rest coming from the Uber Eats food-delivery business.

Uber lived up to its forecast with ride-hailing bookings of $11.45 billion and Uber Eats bookings of $3.07 billion in the first quarter, with the rest credited to the company’s “Other Bets” ventures. Uber Eats bookings more than doubled from a year ago, increasing 108%, while ride-hailing increased about 22%.

Lyft stopped disclosing bookings information in its first earnings report after its earlier IPO, despite providing the information in pre-IPO filings. Chief Financial Officer Brian Roberts said at the time that Lyft “really wanted to try to avoid investor confusion” in not providing the information.

The revenue breakdown was roughly similar to bookings. Uber said that about 76.7% of revenue came from ride-hailing, and 17.3% from Uber Eats, with the rest credited to Other Bets and “Vehicle Solutions.”

Uber’s chief operating officer and chief marketing officer are stepping down

Jun 7 2019

Uber’s Chief Operating Officer Barney Harford and Chief Marketing Officer Rebecca Messina are stepping down, the company said Friday.

In an email to employees, CEO Dara Khosrowshahi said that Uber’s progress now gives him the time to be more directly involved in the company’s day-to-day operations. Khosrowshahi wrote in the email that he decided the heads of Uber’s core businesses should report directly to him.

Read Khosrowshahi’s email below:

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Uber Cuts More Than 400 Technical Jobs

Sept. 10, 2019

Uber Technologies Inc. cut 435 technical employees in the company’s latest downsizing as it faces market pressures to turn a profit and the possibility of higher driver pay.

The company laid off 170 employees in the company’s product division and 265 engineering employees, or about 8% of those divisions’ combined workforce, according to a statement from an Uber representative. Most of the layoffs—about 85%—affect employees in the U.S., the company said, although some overseas employees will also lose their jobs.

The ride-hailing giant has more than 27,000 full-time employees around the world, largely the result of the hypergrowth approach it used when it was a startup.

“But at a certain point, bigger teams do not mean better results,” Chief Executive Dara Khosrowshahi said in an internal memo about the layoffs seen by The Wall Street Journal. “On the contrary, bigger often means slower: slower decision-making, blurry lines of authority, and a tendency to say yes to everything rather than doing the hard work of prioritization.”

The company laid off a third of its marketing department in July.

“We are not doing this for Wall Street,” Mr. Khosrowshahi said in the memo that was emailed to employees. :wink: “It’s critical we get our edge back and continually push ourselves to do better.”

Last month, the company recorded its largest-ever quarterly loss (-$5.23 billion) as it faced heavy competition in Latin America and elsewhere, as well as big expenses related to its IPO and slowing growth in its core rides business, which it continues to subsidize. Revenue at the ride-hailing company climbed 14% to $3.17 billion in the second quarter, its smallest quarterly increase on record.

However, Uber has told investors it expects losses to start narrowing.

Another threat to Uber’s bottom line is a California bill that would force Uber and similar gig-economy companies to classify drivers as employees, rather than independent contractors, upending their business modeland adding costs of minimum wage and workers’ compensation.

The bill has passed the state assembly, but not the state senate, and Democratic Gov. Gavin Newsom has said he would sign it.

New Uber App to Pair Gig Workers With Employers

Oct. 3, 2019

Uber Technologies Inc. is launching an app aimed at pairing businesses with temporary workers in an effort to bring in more revenue as the company struggles to turn a profit.

The Uber Works app, launching in Chicago on Friday, will match workers such as chefs and cleaners with companies looking to fill a temporary opening, the company said late Wednesday.

The app enables users to sift through jobs by location, pay and skills, Uber said, adding that it spent the past year testing it.


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Uber wants to tap into a lucrative market with its new app. More than a third of the U.S. workforce, or 55 million people, identified as gig workers in 2017, according to the Bureau of Labor Statistics. The bureau projected such workers would account for 43% of the workforce by 2020.

Grubhub Stock Just Lost More Than a Third of Its Value. Yes, Its Earnings Were That Bad.

Oct. 29, 2019

... the food delivery company posted lighter-than-expected Q3 revenues—and more disturbingly—Q4 guidance that was dramatically below Wall Street’s expectations.

The report comes amid a period of intensifying competition in the food delivery business, as companies like Uber’s Uber Eats, DoorDash and Postmates spend heavily to expand their position in the business. Postmates earlier this month postponed a planned IPO, citing market conditions.

For the quarter, Grubhub had revenues of $322 million, up 30% from a year ago, but below the analyst consensus forecast of $330.5 million. Non-GAAP profits were 27 cents a share, in line with estimates. Gross food sales were $1.4 billion, up 15%. “Active diners” were 21.2 million, up 29% year over year, while “daily active grubs” were 457,000, up 10%.

For Q4, Grubhub projects revenue of $315 million to $335 million, below the old Street consensus at $387.3 million. The company sees adjusted Ebitda (earnings before interest, taxes, depreciation and amortization, a measure of cash flow) of $15 million to $25 million, well below the $53.8 million reported for Q3.

In a brutally frank 16-page letter to shareholders, Grubhub addressed how its business is being affected by changing dynamics in the food delivery sector. For starters, the company noted that the 10% rise in daily active customers “was at the lower end of our expectations,” adding “we suspect it may be at the lower end of your expectations as well.”

In the letter, Grub Hub writes that the trend accelerated starting in August.

“As we dug into the data, we saw that our newer diners, particularly those in our newer markets, were not driving as many orders as we expected at that point in their lifecycle,” the company wrote in the letter. “While retention of these newer diners was good, their ordering frequency wasn’t ‘maturing’ at the same level as earlier cohorts...At the same time, we also noticed that the retention rates, not just the frequency rates, of our newest diners (those acquired late in the second quarter), were slightly lower than prior cohorts.”

Grubhub writes that it studied the situation and concluded that “the supply innovations in online takeout have been played out and annual growth is slowing and returning to a more normal longer-term state which we believe will settle in the low double digits, except that there are multiple players all competing for the same new diners and order growth.”

In short, the company is getting crunched by a competitively saturated market.

“We believe online diners are becoming more promiscuous,” the company said. “For years, we saw in our data that a Grubhub diner was extremely loyal to our platform. However, our newer diners are increasingly coming to us already having ordered on a competing online platform, and our existing diners are increasingly ordering from multiple platforms.”

And Grubhub added: “This is a significant change in our industry that will require us, and everyone else, to compete by creating the most value for diners and restaurants rather than relying on industry tailwinds.”

“While our competitors continue to spend aggressively, swallowing steep losses in the process, we need to give new diners more reasons to try Grubhub, stop our existing diners from looking elsewhere and continue growing our diner base to ensure we are best positioned when the industry matures and reaches a stable long-term spending level.” Grubhub says it “will be moving quickly, spending more and trying many different strategies over the next 12-18 months to increase restaurant supply aggressively while making our diner experience more sticky—effectively taking action to remove any reason for diners to look anywhere else.”

Financial Highlights for Third Quarter 2019
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• Gross Bookings grew $3.7 billion year-over-year to $16.5 billion, representing 29% year-over-year growth, or 32% on a constant currency basis.
• Revenue growth accelerated to 30% year-over-year from 14% in the second quarter of 2019.
• Adjusted Net Revenue (“ANR”) growth accelerated to 33% year-over-year, or 35% on a constant currency basis as both Rides and Eats ANR take-rates improved quarter-over-quarter to 22.8% and 10.7%, respectively.
• Net loss attributable to Uber Technologies, Inc. of $(1.2) billion , which includes $401 million in stock-based compensation expense, improved quarter-over-quarter in part due to revenue growth of $647 million.

Uber to Buy Postmates for $2.65 Billion in Stock

July 6, 2020

Uber Technologies Inc. said it has agreed to buy Postmates Inc. for about $2.65 billion in stock, the latest in a flurry of consolidation moves in the food-delivery sector.

The combination boosts Uber Eats, the company’s food-delivery arm that already has an international footprint and is among the largest in the U.S. DoorDash has the largest share of the U.S. food-delivery market, according to research from Edison Trends.

Uber said it would keep the Postmates app running separately after the deal’s closing, expected in the first quarter of 2021. Postmates, founded in 2011 and based in San Francisco, is the smallest among the major U.S. food-delivery companies.

The deal comes after Uber’s failed bid to buy Grubhub Inc. as the ride-hailing giant seeks surer footing amid the Covid-19 pandemic, which has crushed its rides business. There were also regulatory concerns that a combination with Uber would create a monopoly in New York City. Grubhub last month agreed to be bought by Dutch food-delivery giant Just Eat Takeaway.com NV for more than $7 billion.

Uber Chief Executive Dara Khosrowshahi on Monday said Uber Eats’ second-quarter bookings more than doubled from the previous year. In May, he said Uber Eats was a bright spot, with gross bookings rising 52% in the first quarter to $4.68 billion from the year-earlier period. Companies have offered steep discounts to get consumers to try out their food-delivery services.

But Uber’s ride business, which accounted for three-quarters of Uber’s revenue before the pandemic, plunged 80% in April, and the company has taken cost-cutting measures such as eliminating several thousand jobs. Though Uber said the decline in rides has softened, a new wave of coronavirus infections has recently intensified in the U.S.

Uber said Monday it estimates that it will issue about 84 million shares of common stock for 100% of Postmates’s fully diluted equity.