Uber’s missed earnings do little to scare buyers as growth signs excite

Uber Technologies, Inc. (NYSE:UBER) is up more than 7% in the last five days. The gains come after Uber missed expectations in its third-quarter results. Despite failing to meet expectations, Uber’s $9.29 (£7.61) billion revenue was 11% higher than last year. A net income of $221 (£181.2) million was an improvement from a loss of $1.2 (£0.98) billion last year. 

After the quarter results, investors focused on Uber’s strengths, increasing their buying interest. The company recorded $35.3 billion in gross bookings, a 21% growth from last year. The bookings are expected to rise to between $36.5 billion and $37.5 billion in Q4.

Monthly active customers rose by a robust 15% to 142 million. The number of trips completed on the Uber platform grew 25% year-over-year to 2.44 billion. CEO Dara Khosrowshahi expects Uber to continue benefiting from spending shifts from retail to services.

The robust performance indicators underscore that Ubser is hitting critical competitive advantages. The strengths come from the increased demand for the company’s services and turnaround strategies. The ride-hailing giant made its first-ever profit in Q2 2023, which has been maintained. The company will likely enjoy an upward trajectory as global travelling normalises in a post-Covid era. 

Key innovations critical to Uber’s growth

Uber’s gains aren’t by accident, as the company has embarked on key innovations that are paying off. In Q3, the company indicated that its global member base increased to 15 million. The growth has been facilitated by innovative products such as Uber One, a cross-platform membership program. The program was recently launched in Portugal, Colombia, and Peru, expanding its reach to 18 countries.

The company also expanded its motorcycle ridesharing service in 20 countries. Uber said Uber Moto trips doubled from last year. The ride giant is also on the running for increased freight mobility. It recently partnered with JetBlue for its Uber for Business (U4B) service.

Advertising revenue is another segment Uber seeks to capitalise. The company introduced its in-car tablet advertisements in new U.S. markets. It also expanded post-checkout ads on Uber Eats in key markets such as Canada, France, the U.K., and Australia. The expansion diversifies Uber’s revenues, positioning the company for further growth. 

Should you buy Uber stock?

Uber is rated a “strong buy” on Zacks Rank. A technical outlook of the stock shows a strong momentum to a potential resistance at $61. 

From the chart above, Uber is breaking from a resistance level at $48. If the breakout is confirmed, this will reinforce a bullish bias. Buying Uber after a confirmed breakout and confirmation is recommended, with a target of $61. Considering the RSI is approaching an overbought level, the stock may correct before a further continuation. However, the strong quarter results and outlook endear investing in Uber in the longer term.