Analysts have praised Uber Technologies Inc (NYSE:UBER, ETR:UT8) after the ride-hailing app outperformed expectations for the second quarter, sending its shares 5% higher at $68 late morning on Wednesday.
Analysts at Wedbush attributed the jump in Uber’s stock price to low expectations going into the print, given recent market volatility and concerns around a weakening consumer.
“Uber shared that across all income cohorts, there has been no evidence of consumers trading down,” they wrote.
“Further, the company highlighted that the business has aspects that are counter-cyclical; when there is macro weakness, driver supply improves, which ultimately brings down prices for consumers, creating a more affordable product.
“Management also highlighted the product's scale and efficient network, which makes Uber an attractive platform for autonomous vehicle (AV) providers, pointing to recent partnership announcements and late-stage discussions with additional global AV players.”
The analysts believe while these comments have alleviated some investor concerns in the near term, they believe higher stock price levels could see the focus shift back to the decreasing magnitude of beats in recent quarters and longer-term unknowns related to autonomous vehicles.
However, they wrote they “remain constructive on the fundamentals of the business,” repeating their ‘Outperform’ rating and $80 price target on the stock.
“Uber remains the dominant global leader in mobility, and notably, in Q2, the company gained year-over-year category position in delivery across all of the company's top 10 markets,” they wrote.
“35% of Uber users are now consumers of multiple products, as the company reinvests in the business to improve adoption across new verticals and non-UberX segments. The subscription base continues to grow, reaching an all-time high, with Uber One members now representing about 50% of delivery gross bookings.”
Analysts at Oppenheimer also repeated their ‘Outperform rating on Uber and kept their price target unchanged at $90.
“We believe Uber's superior network liquidity and leading logistics technology are well positioned to capture additional market share in ride-sharing (currently less than 1% of the $6.1 trillion total addressable market) and online food delivery (15% of total addressable market), which remain underpenetrated globally,” they wrote.
“Expansion into new markets, improved freight offering, new transportation solutions (New Mobility), and positive traction with subscription products could be potential near-term catalysts, along with autonomous technology improving marketplace unit economics.”
They also see a compelling case for long-term Robotaxi partnerships. “[Management] do not expect a ‘winner-take-all’ scenario in Robotaxi, with many OEMs coming to market over time and likely partnering with Uber,” they highlighted.