The company is under increasing pressure to demonstrate its ability to turn a profit as rival Lyft posts shrinking losses and better-than-expected growth figures half a year after going public. Uber also touted that its revenue had grown 30 percent, in addition to increased returns on its rides segment in part due to a cooling price war.
Uber’s valuation has been sliced by a third since it was listed on the stock market at $45 in May.
Uber’s stock dropped more than 5 percent in after-hours trading after the company posted its third consecutive loss topping $1 billion. The shares closed at $31.08 each Monday.
Analysts were discouraged by a slight miss on gross bookings, a gauge of demand, from the combined Rides and Eats business. Gross bookings for a trip represent the total paid by a customer for the ride or food delivery. That category rose 29 percent to $16.47 billion compared with the same quarter a year ago.
“For a company where investors are already skeptical, they needed to come out with an A-plus quarter and instead it was a B-minus,” said Dan Ives, an analyst with Wedbush Securities. “This, as a precursor to Wednesday’s lockup — there are lots of agita from investors, and this quarter did not soothe those fears.”
On the company’s earnings call, Uber chief executive Dara Khosrowshahi said users could expect to see fewer discounts on shared-ride products such as Uber Pool and Express Pool as the company shifts.
“The focus really is to drive lower rates based on the best technology out there, versus just driving lower rates and growth through discounting,” he said.
Meanwhile, the company’s employee lockup period, where there are restrictions on whether workers can sell their stock, was expected to lift this week, raising concerns about a potential rush to exercise those options. More than $20 billion in stock could come into play, according to Ives — or nearly 40 percent of the company’s market capitalization at the end of Monday.
Uber Chief Financial Officer Nelson Chai sought to allay those fears, in response to an analyst question about whether Uber would work with shareholders to prevent that outcome.
“You can assume that we’ve had a lot of dialogue and very active dialogue” with shareholders, Chai said.
Lyft’s stock climbed Wednesday after it reported strong revenue growth and a narrower quarter-over-quarter loss. The company also revised its financial outlook to predict higher-than-expected growth — though Uber remains the dominant player in the ride-hailing space.
Analysts had expected Uber to report revenue growth and a narrower loss, given the cutbacks and other efforts to make the company run more efficiently — expectations Uber matched. They were heavily focused this week on whether Uber could maintain enough cash on hand to keep itself afloat in the face of significant losses, even as the company’s dominant market share — 70 percent or more, according to IPO documents from both companies — gave it an upside over its rival.
Uber said it closed out the quarter with more cash than the prior one, following asset sales and investments.