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Can Uber’s earnings provide a bullish catalyst for the share price?

Uber’s stock has failed to recover the June highs, but with a more optimistic technical pattern emerging, perhaps earnings will give the stock a reason to move higher.

When is Uber’s earnings date?

Uber reports earnings for the second quarter (Q2) on 6 August, before the market open.

What to expect from Uber’s earnings

Uber is expected to report a net loss of $1.4 billion, an improvement on last year’s $5.2 billion loss but worse than the $1.1 billion lost in Q1. Revenue is expected to have fallen 31% to $2.1 billion, compared to the $3.5 billion of Q1.

For Uber, hopes of a decent earnings report will lie with its food delivery division, Uber Eats. Analyst forecasts suggest that its ride-hailing service will see activity levels down 70%-80% compared to a year ago, as individuals and businesses went into lockdown. Q1 saw a 52% rise in bookings for Uber Eats, with adjusted net revenue for the division up 121%. These figures came as the US was only just going into lockdown, so many will be hoping Uber Eats can do even better.

Like practically every other stock in this earnings season, Uber’s update on post-Q2 trading and its outlook for the rest of the year will be closely scrutinised. If it can give a sufficiently positive outlook then the firm may be forgiven if it misses earnings estimates or does not provide a sufficiently large bounce in performance terms.

How to trade Uber’s earnings

Uber rallied 8.9% when it reported Q1 results in May. Of the 42 analysts covering the stock, 32 rate it as a ‘buy’, with three ‘outperforms’, six ‘hold’ ratings and only one ‘sell’ rating.

Since the low in March, Uber stock has seen a sharp decrease in volatility. The average daily range using the 14-day average true range (ATR) is now 131.93, or 4.3% of the stock price, versus 13% in late March. This lower volatility may allow for tighter stops, but we can expect volatility to pick up on earnings day.

Uber stock price: technical analysis

Uber reached its highest level since early March when it hit $38.77 in early June. But this has marked the high point for the time being. Rallies to $34.00 have hit a zone of resistance, so a longer-term bounce needs to clear this to provide a more bullish outlook. Losses have been contained around $30.00 in recent weeks, and with the stock attempting to carve out a low around $30.00 we could see a bigger attempt at a push higher in the wake of earnings.

Uber: a consumer spending bellwether?

Uber is well-positioned to be a useful gauge of how the recovery is faring. If it can point to a rising number of journeys for its ride-hailing division then investors may take heart. With consumers still nervous about the outlook, its food delivery arm is likely to see increased business activity. The stock has struggled over the past two months but a solid earnings report could provide the bullish catalysts that investors are hoping for.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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