Uber shares fell Friday after the company’s second-quarter results released Thursday.
INDRANIL MUKHERJEE / AFP via Getty Images
The shares of Uber Technologies Inc. resigned Friday because concerns about the negative effects of the COVID-19 pandemic on the company’s business seem to be pending in hopes of its booming food segment.
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reported gains Thursday afternoon, analysts wrote positively about the pivot toward food delivery with Uber Eats and the company’s austerity measures. But sentiment about the Rides business – where gross bookings plunged 73% year-on-year – was not optimistic.
“The business of driving is still a mess,” wrote Piper Sandler analysts, raising their price target to $ 34 from $ 33. “In a world defined by coronavirus lockons and recovery from false starts, it’s difficult the high grade of ignorance in Uber’s most profitable business. ”
Concerns about driving hail continue even as Uber saw improvement in driving hail in July and it said demand began to recover especially outside the United States. MKM Partners, though, said it is now projected that bookings in the ride-sharing business in 2021 will reach the levels that hit Uber in 2018, much less last year. The analysts repeated a buyout and increased their price target to $ 40 from $ 38.
Analysts were split in their response to the forecast, with ten rising price targets and three declining, according to FactSet tracking, which did not report ratings reviews on Friday afternoon. Uber stock fell as much as 6.5% in Friday’s trading, closing 5.2% at $ 32.91, but were still up more than 10% in 2020.
Uber Eats was the bright light for analysts after Chief Executive Dara Khosrowshahi essentially called the company “a second Uber” during Thursday’s conference call. Gross delivery bookings fell 113% year-over-year, and Uber Eats revenue rose 103% to $ 1.21 billion, bringing in more than the car company first brought in.
For more: Uber revenue is ‘a story of two companies’
Use of food delivery app is led by DoorDash, followed by Uber Eats, according to a report published by Raymond James this week, who also said there are more first-time users of the apps because diners remain hesitant to food at restaurants. Uber’s acquisition of Postmaten, which is expected to close in the first quarter of 2021, will boost Uber’s position in space.
“The delivery story is becoming increasingly positive with user gains, consumer behavior and marginal benefits that need to expand beyond the current environment,” said Stifel analysts, who maintained their buying choices and raised their price target to $ 40, said in a note Friday .
See: Uber, Lift Drivers in Limbo as Judge Hear Arguments in California Case
As for the regulatory issues for the company, Khosrowshahi expressed confidence during the conference call Thursday in Proposition 22, which will be on the November vote in California and aims to maintain the classification of drivers as independent contractors. Analysts are also looking at concerns about regulation in New York and a possibility of increased rules related to food delivery.
Of 42 Uber analysts tracked by FactSet, 35 have the equivalent of a buy-in on the stock, while six call it a hold and only one labels the stock a sell. The average price target on Friday was $ 41.99, according to FactSet, roughly 28% higher than the running rate.
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