ETFs
Should you buy Uber’s post-earnings dip with ETFs? – May 9, 2024
The carpooling company Uber (UBER – Free report) the stock fell approximately 5.7% on May 8, 2024 following the release of first quarter results. Revenues met estimates while gross bookings were lower. Uber’s net loss widened to $654 million from $157 million in the same quarter last year due to revaluations of Uber’s investments.
Uber Technologies reported a quarterly loss of $0.32 per share, compared to the Zacks Consensus Estimate of $0.21. That compares to a loss of $0.08 per share a year ago. Total revenues of $10,131 million exceeded the Zacks Consensus Estimate of $10,076 million. Turnover jumped 15% year-on-year.
The company reported $37.65 billion in gross bookings for the period, which was lower than the $37.93 billion analysts expected, according to StreetAccount, per CNBC. The company’s delivery segment reported revenue of $3.21 billion, up 4% year-over-year and 3% quarter-over-quarter. Analysts expected $3.28 billion, according to StreetAccount. Its delivery revenue margin was negatively impacted by 230 basis points due to “business model changes” in the first quarter.
Tips on highlights
For its second quarter, Uber expects to report gross bookings of between $38.75 billion and $40.25 billion, compared to $40 billion according to StreetAccount, according to CNBC. Uber expects adjusted EBITDA of between $1.45 billion and $1.53 billion, compared to $1.49 billion expected by analysts.
Should you buy the dip with Uber-Heavy ETFs?
Uber has a Zacks Rank #3 (Hold). He has a moderate VGM (Value-Growth-Dynamic) grade “C”. The stock comes from Internet services industry that has an Bullish Zacks Rank (putting it in the top 22% of over 251 Zacks industries).
If you’re upset about Uber’s weak prospects but still want to leverage its exposure to the sector, you can play Uber-heavy ETFs. While investors will be watching Uber closely in the current quarter, ETFs heavily focused on Uber should also be watched. Ultra-heavy ETFs will also be impacted by their earnings.
Investors should note that Uber’s peer company Lyft (LYFT – Free report) jumped 7.1% on May 8. Lyft reported first-quarter 2024 earnings of 15 cents per share, which beat the Zacks Consensus Estimate of 9 cents and improved year over year. Revenues of $1,277.2 million also beat the Zacks Consensus Estimate of $1,170.1 million and improved year over year.
Several ETFs with exposure to Uber also have holdings in Zacks Rank #2 (Buy) Lyft. Therefore, these ETFs will likely benefit from the recent rise in Lyft shares. It has an optimistic VGM score of “B”.
ETF with exposure to Uber technologies
iShares US Transportation ETF (IYT – Free report) – Uber has an exposure of 17.46%; Lyft has 1.12% exposure
Franklin Disruptive Trading ETF (BUY – Free report) – Uber has an exposure of 7.21%
ProShares On-Demand ETF (OND – Free report) – Uber has an exposure of 4.75%; Lyft has 4.65% exposure
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