Mackenzie Tatananni

Uber Technologies stock sank Wednesday as the ride-hailing service reported mixed fourth-quarter results and issued soft guidance for the first quarter of 2025.

Revenue of $12 billion for the fourth quarter marked a 20% increase from the previous year and surpassed Wall Street's calls for $11.8 billion, according to FactSet.

Uber said fourth-quarter net income of $6.9 billion included a $6.4 billion benefit from a tax-valuation release, and a $556 million benefit due to net unrealized gains related to the revaluation of its equity investments.

The company also reported operating income of $770 million, which sharply missed analysts' calls for $1.15 billion.

Shares of Uber tumbled 8.2% to $64 on Wednesday.

For the current quarter, the company said it anticipates gross bookings to grow 17% to 21% from a year ago, translating to a range of roughly $42 billion to $43.5 billion. At the midpoint, the forecast was below analysts' expectations for $43.5 billion.

Uber forecasts first-quarter adjusted earnings before interest, taxes, depreciation, and amortization of $1.79 billion to $1.89 billion, representing 30% to 37% growth. Analysts had expected $1.85 billion.

"We closed out 2024 exceeding our three-year outlook for gross bookings, adjusted Ebitda, and free cash flow," Chief Financial Officer Prashanth Mahendra-Rajah said in a statement.

"We believe we remain undervalued despite these strong fundamentals, and plan to be active and opportunistic buyers of our stock."

The company said it had entered into an accelerated share-repurchase agreement in January to buy back $1.5 billion of shares, as part of a $7 billion share-repurchase authorization announced last year.

Wedbush analyst Scott Devitt pointed to Uber's weaker-than-expected outlook in a research note Wednesday.

While fourth-quarter gross bookings of $44.2 billion were ahead of consensus and at the high end of the company's guidance range, other metrics were disappointing, Devitt said. He cited fourth-quarter adjusted Ebitda of $1.8 billion, which fell short of the firm's estimate by around $19 million.

Devitt also noted that the first-quarter guidance assumes greater currency risk relative to the fourth quarter, with a 5.5-point foreign-exchange headwind to gross bookings growth.

The analyst attributed the stock decline Wednesday to slower expectations for bookings growth in the current quarter and adjusted Ebitda guidance that failed to impress.

"Still, we view the recent dislocation in shares as unwarranted for a company demonstrating strong fundamentals," Devitt wrote. He reiterated an Outperform rating and price target of $86 on the stock.

Shares of Lyft were down 4%. The rival ride-hailing app is scheduled to report earnings on Feb. 11.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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February 05, 2025 10:59 ET (15:59 GMT)

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