Uber Shares Fall on Weaker-Than-Expected Q3 Profit Forecast

Uber Technologies (NYSE: UBER) on Wednesday issued a third-quarter profit forecast that fell short of Wall Street expectations, signaling that currency fluctuations and significant investments will weigh on near-term earnings. The ride-hailing and delivery company's shares fell approximately 3% in premarket trading following the announcement.

Q3 Outlook Details

For the current quarter, Uber anticipates adjusted earnings per share between 84 cents and 88 cents, below the analyst consensus of 89 cents, according to data compiled by LSEG. The company projects third-quarter gross bookings in the range of $58.25 billion to $60.25 billion, which is broadly in line with expectations of $59.21 billion.

Uber also warned that foreign exchange is expected to reduce its reported gross bookings growth by about one percentage point compared to the prior year. This marks a shift from the previous four quarters, where currency effects had provided a boost to growth.

Investment and Capital Allocation

Investor focus has sharpened on Uber's capital allocation strategy, particularly after its recent $14.8-billion deal for Delivery Hero, which it plans to finance with existing liquidity and debt. The company reaffirmed its commitment to this strategy and also outlined plans to invest over $10 billion in autonomous vehicles in the coming years, though a specific timeline was not provided.

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Operating expenses rose about 10% in the second quarter, with increased spending across marketing, research, and administrative functions, reflecting the company's growth and investment initiatives.

Second-Quarter Performance

Despite the soft forecast, Uber's second-quarter results were solid. The company reported gross bookings of $58.02 billion, surpassing analysts' estimates of $57.06 billion. Adjusted core earnings also exceeded expectations.

CEO Dara Khosrowshahi noted that the business saw broad-based demand, partly driven by travel for the FIFA World Cup, during which over 8 million tourists used the service in host cities. Revenue for the quarter rose 12% to $14.19 billion, narrowly missing estimates of $14.24 billion, a result the company attributed to an accounting change in Britain.