3 Takeaways From Uber's Q2 Print

Uber Technologies Inc. UBER continued to find some sell-side appreciation on Monday despite ongoing investor squeamishness over a disappointing second quarter report last week in which it missed revenue and earnings estimates. 

JMP Securities on Monday joined a small chorus of analysts who continue to find positives in the ride-hailing giant. 

The following are three bullish takeaways on Uber from JMP Securities. 

Rationality And Stability

JMP analyst Ronald Josey’s biggest takeaway from Uber’s quarter: the rideshare market is becoming more stable and rational. Competition in the business is increasingly based on product and experience, rather than the customer-chasing discounts that marked the rise of the new industry in its first years, Josey said in a Monday note. (See his track record here.) 

Analysts noted the same thing about Uber’s top competitor, Lyft Inc. LYFT, which has also reduced discounts, when it reported results last week.

“We note promotions (particularly in the U.S.) and sales and marketing spend overall declined from 1Q levels and given the adoption of Uber Rewards and Uber Pro (50% of drivers in the U.S. are enrolled), Uber is creating longer-term relationships with its users,” Josey said.

“Stepping back, in the growing market of ridesharing, the competitive landscape appears to be stable.”

Eats, NeMo Growth

Uber’s monthly active platform customers growth was a positive in the second quarter, surpassing 100 million in June as trips grew by 35% year over year. But the real impressive growth in monthly active customers was in Uber’s food delivery service UberEats, which grew MAPCs by 140% year over year.

Uber also enjoyed strong growth in another non-core business: the NeMo — for New Mobility — scooter business. The segment saw 100% quarter-over-quarter growth as it launched in 11 new markets, including Paris and Berlin, that saw strong and quick adoption.

Decent Adjusted ANR 

Uber's adjusted net revenue may have seemed disappointing, coming in with 11.6% growth, but Josey and other analysts were quick to note that it was affected by a one-time driver appreciation award of nearly $300 million.

When adding that back in, and taking out foreign exchange, ANR grew 26% year over year, up from 18% in the first quarter, the JMP analyst said. 

“Given accelerating growth, improving profitability, (and) a more stable competitive environment in what we believe is a market that is just 1% penetrated in terms of miles driven in the U.S., we would take advantage of any dislocation in shares,” Josey said. 

JMP reiterated a Market Outperform rating on Uber and upped the price target from $54 to $56.

Price Action

Uber shares were down 5.47% at $37.85 at the time of publication Monday. 

Related Links:

Bullish Sell-Side Unfazed By Uber's Big Quarterly Loss: 'A Clear Path To Profitability'

Uber Falls On Wider-Than-Expected Q2 Loss Per Share

Photo courtesy of Uber.