Ticker Reports for August 6th
Uber's Earnings Beat: Rideshare and Delivery Surge
Uber Technologies Inc. (NYSE: UBER) has delivered strong second-quarter 2024 results, surpassing Uber’s analyst community’s expectations for revenue and earnings. Uber’s financial performance was driven by robust growth across its core business segments, and Uber’s earnings beat has fueled investor confidence and propelled the company's stock price upward. But what exactly fueled this impressive performance, and what does it signal for the future of the ridesharing giant?
Uber's Q2 2024 Performance Overview
Uber reported revenue of $10.7 billion for the second quarter of 2024, demonstrating a solid 16% increase year-over-year. This exceeded analysts' predictions of $10.57 billion, signaling strong and consistent growth for the company. Furthermore, Uber's adjusted core earnings reached $1.60 billion, surpassing the anticipated $1.51 billion. This impressive profitability demonstrates the company's ability to leverage its operational scale and generate strong cash flow.
Segment Revenue Breakdown: Mobility vs. Delivery Performance
Uber's core business segments, Mobility (rideshare) and Delivery (food delivery) exhibited strong performance during the second quarter. Mobility gross bookings surged 25% year-over-year, reaching $20.6 billion, while Delivery gross bookings climbed 16% to $18.1 billion. This growth in gross bookings translates to a 25% year-over-year increase in Mobility revenue and an 8% increase in Delivery revenue, indicating strong demand for both services.
While Mobility and Delivery experienced significant growth, Uber's Freight segment faced headwinds due to a challenging freight market environment. Freight revenue remained relatively flat year-over-year at $1.3 billion. However, the company is actively exploring strategies to enhance efficiency and optimize its freight operations to improve performance in this segment.
Key Takeaways from Uber's Earnings Call
During the earnings call, CEO Dara Khosrowshahi provided valuable insights into the factors driving Uber's financial performance. Khosrowshahi emphasized the company's record profitability achievement, underscoring this accomplishment as a critical step towards securing long-term financial sustainability. This profitability stems from strong revenue growth across its diverse business segments, disciplined cost management strategies, and ongoing efforts to optimize operational efficiency across all levels of the organization.
Further contributing to this success is the sustained and growing consumer demand for Uber's services. Khosrowshahi acknowledged the increasing reliance on Uber's platform as a solution for everyday transportation and delivery services. This expanding role in consumers' lives is evident in the consistent growth of gross bookings and active users on the platform.
Beyond its financial achievements, Khosrowshahi highlighted Uber's commitment to its driver and courier partners. He underscored the substantial earnings generated by these individuals through the platform, emphasizing the company's role in providing flexible economic opportunities. This commitment to supporting its workforce is ethically sound and strategically crucial for maintaining a strong and engaged network of drivers and couriers, ensuring the reliable and efficient delivery of services that customers expect.
Finally, Khosrowshahi reiterated Uber's dedication to technological innovation to enhance the customer experience and improve operational efficiency. This commitment is evident in the company's continued investment in advanced mapping technology, enhanced safety features, and innovative driver tools that streamline operations and optimize service delivery. This focus on technology improves customer satisfaction and strengthens Uber's competitive advantage in the rapidly evolving landscape of on-demand transportation and delivery services.
Investor Confidence Boosted by Strong Q2 Performance
Uber's stock price jumped over 8% in pre-market trading following the release of its Q2 2024 earnings report. This rise reflected investor enthusiasm for the company's strong performance. While the stock has experienced some volatility since the beginning of the year, trading down 5% year-to-date, the positive earnings report signals a potential turnaround and renewed investor confidence in Uber's long-term growth potential.
Evaluating Uber's Ability to Adapt and Thrive
Looking ahead to the third quarter of 2024, Uber anticipates continued growth, projecting gross bookings between $40.25 billion and $41.75 billion. This represents a substantial year-over-year growth of 18% to 23%. Furthermore, the company expects adjusted EBITDA to fall between $1.58 billion and $1.68 billion, demonstrating a year-over-year increase of 45% to 54%. This optimistic outlook is driven by expectations of sustained consumer demand, strategic partnerships, and ongoing efforts to improve operational efficiency.
Uber's corporate strategy centers around expanding its reach, diversifying its offerings, and enhancing the customer experience. The company continues to invest in new product launches, such as its Uber One membership program and expansion into new markets. Furthermore, Uber is actively pursuing strategic partnerships, such as its recent collaboration with Maplebear Inc. (NASDAQ: CART), owner of Instacart, to power restaurant delivery within the Instacart app. These initiatives are crucial to maintaining a competitive edge in the evolving ride-hailing and delivery services sector.
Despite its strong performance and optimistic outlook, Uber faces several challenges investors should consider. Increased competition from other ride-hailing and delivery companies remains a significant factor. Furthermore, regulatory changes and potential labor shortages could impact Uber's operations and profitability. Investors should carefully evaluate these risks and assess the company's ability to adapt to the changing market dynamics and overcome potential obstacles.
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Hims & Hers Reports Stellar Quarter: Stock Set for a Rally
Most investors have had to worry about the accelerating sell-offs happening across the global stock markets this week, which aren’t being encouraged by news from Warren Buffett’s latest decisions. The Oracle decided to start decreasing its exposure to some of America’s technology darlings, such as Apple Inc. (NASDAQ: AAPL), which was cut by 50%, or Bank of America Co. (NYSE: BAC).
Even a few months ago, investors received a warning from Stanley Druckenmiller after he sold out of NVIDIA Co. (NASDAQ: NVDA) to reallocate into bonds and small-cap stocks. Some investors may have benefited from copying his liking of the iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT), but these have now become too famous a pick to follow up on.
What is still—arguably—undervalued and poised to rally in the coming months is a little-known healthcare stock called Hims & Hers Health Inc. (NYSE: HIMS). Bringing the stability and predictability that come from investing in a defensive space like health care, along with the exciting and promising growth potential that technology offers, this company just proved to the market that an S&P 500 sell-off is nothing compared to the growth it delivered in its latest quarterly results.
Hims & Hers Stock: Double-Digit Crash Turns Into Double-Digit Beat
Over the past few weeks, bearish action has taken hold of Hims & Hers stock, but it has nothing to do with the company’s prospects at all.
After posting disappointing demand guidance for its weight loss and diabetes watch medical devices, shares of DexCom Inc. (NASDAQ: DXCM) brought down all other stocks associated with weight loss products.
The main difference is in the word devices; Hims & Hers doesn’t sell devices but instead sells medicine directly to aid in weight loss efforts. Secondly, according to its investor presentation, only one of ten product offerings must deal with weight loss.
Not only is weight loss a minuscule share of the company’s revenue, but it was only introduced in December of 2023, so the impact could not have been as significant as to send the stock trading as low as 68% of its 52-week high. Here’s what the actual results look like in support of a potential recovery rally.
Total subscribers grew 43% over the past 12 months for Hims & Hers. Subscriber growth is much different from monetizing these new members. Still, investors can rest assured that the company achieved this, as shown in the 52% jump in revenues over the year.
All told, one of the most critical metrics in any business also jumped up by triple-digits this time. Free cash flow (operating cash flow minus capital expenditures) is up to $53.6 million, or 377% on the year, and that is one of the main milestones investors look for when finding their next multi-bagger investment.
Wall Street Sees Significant Upside Potential in Hims & Hers Stock
Riding on this recent financial momentum, management felt comfortable guiding the rest of 2024 higher, and that is not only enough to send the stock into a recovery rally and makes it easier for Wall Street analysts to correctly value the stock today.
Those at Truist Financial see a price target of up to $23 a share for Hims & Hers stock, daring it to rally by 29% from where it trades today. To support these targets, the general forecast for up to 90% earnings per share (EPS) growth in the next 12 months is the foundation for bullish sentiment.
However, these analysts weren’t the only ones on Wall Street willing to publicize their bullish views. Those at the Vanguard Group, Hims & Hers’ largest shareholder, boosted their stakes in the company by 1% in the past quarter. This addition brought the asset manager’s net investment to $221.4 million today, or 6.7% ownership in the company.
One last check investors can review is by decrypting the market’s message. To do this, Hims & Hers stock should be compared to the rest of its peer group on a valuation basis. Where a positive outlier is found, that is typically bullish sentiment for the stock.
Regarding the price-to-book (P/B) ratio, Hims & Hers stock trades at an 11.1x multiple to command a premium valuation over the medical sector’s average 4.6x multiple today. Usually, there is an excellent reason for stocks to trade at a premium, and investors have more than one when looking at the recent financial momentum in Hims & Hers stock.
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Cloudflare Stock Flares Up on Solid EPS Beat and Raised Guidance
Content delivery network (CDN) service provider Cloudflare, Inc. (NYSE: NET) reported a solid Q2 2024 earnings report, resulting in a 6% gain the following day. This is impressive, considering the Nasdaq composite index fell nearly 418 points that day. Cloudflare is a one-stop shop for millions of websites offering a global network and comprehensive platform of services ranging from robust cybersecurity to optimized performance for streaming and website loading speeds and reliability. Cloudflare aims to make the internet safer, faster, and more reliable for businesses and end users worldwide.
Cloudflare operates in the computer and technology sector, competing with CDNs like Akamai Technologies Inc. (NASDAQ: AKAM), Zscaler Inc. (NASDAQ: ZS), and Fastly Inc. (NYSE: FSLY).
What is a Content Delivery Network and What Does It Do?
A CDN is a network of servers that stores and delivers content instantly, securely, and efficiently to end users. The servers store website content like videos, HTML files, and images, which are readily and instantly accessible when requested. Due to its redundancy and low latency, load times are reduced, resulting in an optimized experience. Cloudflare's CDN network spans over 300 cities in over 100 countries, connecting more than 12,500 networks, reaching over 95% of the world's population in under 50 milliseconds. The result is faster website loading, streaming content, safety from malicious cybersecurity attacks, and better browsing for users.
Cloudflare is More than Just a CDN
Cloudflare provides value-added services in addition to its CDN. It claims itself to be the world’s first connectivity cloud. It’s integrated with all networks with built-in intelligence on a unified and simplified interface. It provides firewalls, TLS encryption, image optimization, and caching to expedite loading speeds with direct connections to nearly every service, cloud provider, and major enterprise. Cloudflare’s network blocks 158 billion cyber threats daily. Cloudflare is used by some of the largest hyper scalers, service providers, and internet giants, including Netflix Inc. (NASDAQ: NFLX), Amazon.Com Inc. (NASDAQ: AMZN), International Business Machines Co. (NYSE: IBM), and Uber Technologies. Inc. (NYSE: UBER).
NET Stock Attempting a Descending Triangle Breakout
The daily candlestick chart for NET illustrates a descending triangle breakout pattern. A descending triangle is a bearish pattern comprised of a descending upper trendline, which started at $87.18, falling to the flat-bottom lower trendline support at $74.37. NET attempted to break out of the triangle twice, but each time failed as shares fell back under the descending trendline as lower highs continued to form. The Q2 2024 earnings beat caused a gap above the upper trendline resistance and is attempting to break out for the third time. The daily relative strength index (RSI) is attempting to bounce through the 50-band. Pullback support levels are at $76.52, $74.37, $71.77, and $68.95.
Growth Continues to Accelerate
Cloudflare reported Q2 2024 EPS of 20 cents, beating consensus estimates by 6 cents. GAAP gross profit was $312 million or 77.8% gross margin. Net income was a GAAP net loss of $15.1 million compared to a loss of $94.5 million in the year-ago period. Non-GAAP net income was $69.5 million, up from $33.7 million last year.
Revenues surged 30% YoY to $401 million, beating $394.11 million consensus analyst estimates. Operating cash flow was $74.8 million or 19% of revenue, and cash flow of $38.3 million was 10% of revenue. Cloudflare closed the quarter with $1.757 billion in cash and cash equivalents.
Cloudflare Issues Upside Guidance
The current landscape of enterprises buying IT services and products has turned darker amidst macroeconomic uncertainty. Companies have stated that deals are being scrutinized more as the sales cycle gets elongated. This backdrop is what makes Cloudflare’s upside guidance impressive and may further justify its stock price trading at over 80x non-GAAP 2025 operating profits.
Cloudflare provided upside guidance for both Q3 and full year 2024. For Q3 2024, Cloudflare forecasts EPS of 18 cents versus 15 cents consensus estimates. Revenues are expected between $423 million to $424 million versus $422.74 million consensus estimates. Non-GAAP income from operations is expected between $50 to $51 million.
The company expects full-year 2024 EPS between 70 cents and 71 cents versus 61 cents in consensus estimates. Revenues are expected between $1.657 billion and $1.659 billion, versus $1.65 billion in consensus analyst estimates. Non-GAAP income from operations is expected between $196 million and $198 million.
Cloudflare Co-Founder and CEO Matt Price commented, “We had a strong second quarter, crossing $1.6 billion in annualized revenue and growing 30% year-over-year. The world is still complicated, but our team remained focused on execution and delivered terrific results, including a double-digit year-over-year improvement in sales productivity.”
Cloudflare analyst ratings and price targets are at MarketBeat. There are 25 analyst ratings on NET stock, comprised of 10 Buys, 12 Holds, and three Sells. The stock has a 15.8% upside to the consensus price target of $92.08.
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