I finally feel better with Uber: here’s how to redeem it

Uber Technologies (UBER) released its third quarter financial results Thursday evening. The company recorded a loss of $ 1.28 per share under GAAP, which is below consensus by nearly $ 1 per share. This net result also compares quite unfavorably with the loss of GAAP EPS recorded in the third quarter of 2020 (- $ 0.62). On the revenue side, Uber generated sales of $ 4.85 billion in the three-month reference period. That number beat Wall Street and was good enough for 72.6% annual growth.

Adjusted EBITDA printed in a pedestrian, but positive of $ 8 million. So why the net loss which totals $ 2.4 billion? The company says $ 2 billion of that $ 2.4 billion came directly from a revaluation of the company’s stock investments. In short, the firm is heavily invested in DiDi Global (DIDI), also known as “Uber of China” and as we know, DiDi Global to date has laid an egg. Oh, and after having what was really a very decent quarter, management was cautious. Let’s explore.

Nuts and bolts

Gross bookings increased 57% year-on-year to $ 23.113 billion (a record high) with gross mobility bookings up 67% to $ 9.9 billion, gross delivery bookings up 50 % to $ 12.8 billion and gross freight bookings increased 39% to $ 402 million.

The adjusted EBITDA of $ 8 million mentioned above represents Uber’s very first profitable quarter (on an adjusted basis) as a public company. This very pedestrian result really tells the story of a business torn apart in different directions. Mobility segment adjusted EBITDA, which includes the well-known taxi service we all used, benefited from Adjusted EBITDA of $ 544 million, up 122% from last year. Delivery segment adjusted EBITDA improved from – $ 183 million a year ago to – $ 12 million, while freight segment adjusted EBITDA increased from – $ 73 million to -35 million dollars. The heaviest part of the business is in the corporate G&A and R&D of the platform. This area saw an improvement in Adjusted EBITDA, albeit very slight, from – $ 510 million to – $ 489 million.

Geographically, in terms of income distribution, the United States and Canada saw impressive growth of 66% to $ 2.648 billion, while totals but not growth were much lower elsewhere. EMEA (Europe, Middle East and Africa) grew 80% to $ 1.064 billion. APAC (Asia-Pacific) posted phenomenal growth of 131% to $ 743 million, and lastly Latin America contributed $ 390 million in revenue, up 29%.

Advice

Looking ahead, the company has guided fourth quarter gross bookings in a range of $ 25 billion to $ 26 billion, with Adjusted EBITDA likely to fall into a wide range that starts at $ 25 million and peaks at $ 75 million. of dollars. That’s very light of the nearly $ 100 million Wall Street was looking for. While I think Wall Street may have taken DIDI investing a little more closely than they could have, this cautious stance is one of the reasons the stocks sold overnight.

I also think Wall Street came to view the forecast as perhaps intentionally light, stocks rallied until the early hours of Friday morning. My opinion? Uber may have to wait until the dawn of truly autonomous driving for the company to have the potential to truly excel in terms of profitability, but this business is growing. For the first time in a long time, I feel better with Uber.

Balance sheet

The company’s net cash position is actually going down over the past 12 months if you include short-term investments, which I do. However, the business has experienced significant growth in restricted cash, and including this cash, there is growth not only in cash position, but in total assets. Total liabilities are up year over year due to growth in long-term debt. Total assets always amount to more than 150% of liabilities less equity. The balance sheet is doing well.

Table

Readers will see that UBER hit firm and strict resistance in October at the 38.2% Fibonacci retracement level during the February-September sell-off. This stock has picked up both its 50-day SMA and its 21-day EMA, with this line offering recent support. There is, however, an unfilled $ 40 / $ 42 gap that was created in September and it is quite conceivable that there will be an attempt at some point to close that gap.

With stocks trading so close to recent resistance and not so close to where I think stocks might go, I will not be buying stocks of that name at this level today. However, I am willing to take a discounted equity risk over time and get paid for it.

Right now, the $ 42 UBER January puts still pay around $ 1.40, and the $ 40 January UBER puts pay between $ 0.90 and $ 0.95. I find writing these puts more appealing right now than buying stocks at today’s premium price.

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