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When Uber listed in May 2019 I got stuck in, and encouraged a group of 58 risk-tolerant clients to do so too. It has not gone well so far. Our entry prices range from a high of $46.93 to a low of $33.44. The current share price is $31.02 so everyone is underwater. Uber results were out last night, and I was keen to see how they would do. I had to stay awake until well after 11 pm.
It's obvious that Uber is in growth mode, building its ride hailing business around the world, seeking to become the dominant player in urban mobility. In some ways, it is following a path similar to Amazon, which was widely pilloried in the early days for being a loss-making underperformer.
On to the results. Gross bookings (what customers pay to ride) grew to $16.5 billion, representing 29% year-over-year growth. Third quarter revenue (what the company earns after paying the drivers) came in at $3.81 billion, ahead of consensus. However, the group produced an adjusted loss before interest and depreciation of $585 million which was 28% bigger than the loss than a year ago. This is mainly because Uber is burning cash in new ventures such as Uber Eats and other new businesses such as Uber Freight, electric bikes and scooters, and the temporary employment app called Uber Works.
Dara Khosrowshahi, the very talented (my view) CEO, said "Our results this quarter decisively demonstrate the growing profitability of our Rides segment". Uber aims to be profitable on an adjusted basis for the full year of 2021. Its loss in 2019 is expected to be about $2.9 billion. That's Dara in the picture below.
I'm afraid that Uber shares fell again when these results were digested by analysts after the bell, by as much as 6%. That will put it at around $29 per share, which is 36% below the listing price in May. Uber stock could also be volatile tomorrow (Wednesday) when the lock-up period ends for pre-IPO investors, enabling them to cash out their shares.
You know what I am going to say next right? If you have an appetite for risky bets, you should buy this one and hold it. I'll probably add to my holding today. I believe that one day Uber will rank amongst the world most valuable and prominent corporations.