Uber’s Share Price Drives Higher

Uber's (NYSE:UBER) share price shot up last week as the company posted better-than-expected second-quarter revenue. In the three-month period, revenue was $8.07 billion, topping the $7.39 billion forecast. There were 1.87 billion trips in the three-month period, and that represented a 9% increase on the previous quarter, and a 24% jump in the same period one year ago – but that was starting from a low base as it was during the pandemic. The 9% rise is encouraging as it highlights that people are keen to move around more. In recent weeks, airlines have posted strong passenger numbers, and that has spilled over into Uber’s business as the firm saw a 15% rise in airport bookings compared with the previous three-month timeframe. 

The group is split into two divisions, there is the mobility unit – the car ride service, and the delivery operation – Uber's Eats and courier service. In the second quarter, gross bookings for the mobility division were $13.4 billion, while the delivery segment registered revenue of $13.9 billion. Amid the pandemic, the mobility side of the business took a beating because of the lockdowns, but on the other side of the coin, Uber Eats saw a surge in demand. The fact that both aspects of the firm are strong speaks to a solid business. 

Lately, there have been growing concerns about the health of the global economy, as service sectors are seeing activity taper off, and consumer confidence readings are going downhill. It will be interesting to see how that might impact Uber because the group is reasonably dependent on consumers having high disposable incomes, so if spiralling inflation chips away at people’s pay packages, that could dent the company’s bottom line. On the topic of inflation, Uber confirmed the number of new drivers signing up jumped by 76% on the year – but the figures were distorted by the pandemic. It was reported that more than 70% of new drives cited inflation as the reason for turning to Uber for work. It appears the rise in the cost of living is making Uber more attractive from an employment point of view. 

Uber’s share price was trading in the $40.00 region in February 2020, but as the lockdowns set in, it slumped to below $14 – a record low. Like other stocks, it jumped in November 2020 as it became clear that vaccination for COVID-19 was in the pipeline. 

The Uber share price hit an all-time high in February 2021 as it almost reached $65. From the trough to the peak, the stock surged 360% in just under one year. Following the record-high, the stock entered a bearish run that last about 16 months. Uber’s share price dipped below $20.00 in June but has rallied more than 50% since. If the stock holds above the $28.00 mark, we could see the recent bullish trend continue, resistance might be encountered at $37.44 or $40.00. A break below the $28.00 zone, could pave the way for $24.00 to be tested.