(Bloomberg) -- Uber Technologies Inc. reported weaker-than-expected ride bookings and issued a tepid forecast for the holiday quarter, causing its shares to suffer their biggest decline in two years.
Currency exchange headwinds and a slowdown in US rideshares weighed on the company’s core mobility business in the third quarter. Gross bookings, which includes ride hails, delivery orders and driver and merchant earnings but not tips, were $41 billion, Uber said in a statement on Thursday. That figure falls slightly below the mid-point of the company’s own guidance range as well as Wall Street’s expectations, according to Bloomberg-compiled estimates.
For the current quarter, Uber forecast bookings of $42.75 billion to $44.25 billion, with the mid-point just missing analysts’ estimates of $43.7 billion. The mid-point of the company’s outlook range for fourth-quarter adjusted Ebitda also fell short of expectations.
Uber’s latest results will likely stoke concern from investors that its core US rideshare business isn’t keeping pace during the holiday period. For years, the company has been investing into new areas across both its ride-hailing and delivery businesses in the US and abroad, where it’s seen stronger growth. More recently, it’s added transportation options to its platform including taxis, carpools and shuttles to airports and other venues.
Shares fell 9.3% to close at $72.05, the biggest drop since October 2022, wiping out $15.2 billion of the company’s market value. Shares of its smaller rideshare rival, Lyft Inc. also fell 5%, the most in nearly three months.
One bright spot was that Uber posted a record $1.06 billion in operating income for the quarter, far exceeding estimates for a metric that only turned positive last year.
It said growth in the ride-hailing business was fueled by its performance in the UK, Argentina and Germany thanks to a combination of driver supply, taxis, two-wheelers and scheduled rides.
On a conference call with investors following the report, Chief Executive Officer Dara Khosrowshahi said the US, which makes up a little less than 50% of its gross bookings and more than half of its profitability, has seen some slowdown in rides because of higher insurance costs being passed onto consumers. The slowdown was noticeable in New Jersey and California, he said, where insurance costs are very high.
Still, he remains optimistic about the US market as he expects those costs to rise at a slower rate. The company is partly mitigating those costs by encouraging drivers to drive more safely, he added. He also said consumers are becoming more selective on whether to go out on the weekends, while weekday growth has been stronger thanks to business rides.
Delivery-segment gross bookings beat expectations in the third quarter, but the unit’s 16% year-over-year growth trailed that of leading US delivery app DoorDash Inc., which reported better-than-expected results on Wednesday.
Uber has been expanding service into suburban areas globally and reaching new customer demographics through teen accounts. And it’s struck deals with new merchants — such as H Mart, Michaels and JD Sports — allowing customers to arrange deliveries for things beyond just restaurant orders, which helps boost order frequency.
It’s also made progress this year in adding subscribers to its Uber One program by offering discounts to college students in the US and Canada. The number of members grew about 70% from a year ago to more than 25 million, the company said, adding that these customers spend more than three times each month as much as non-members.
The expansion of Uber’s user base and merchant selection has in turn helped boost its nascent advertising business, which grew nearly 80% year-over-year and helped contribute to the adjusted earnings beat in the period.
At the beginning of the call, Chief Financial Officer Prashanth Mahendra-Rajah proactively commented on the company’s merger and acquisitions strategy, following a recent Financial Times report of the company having explored a bid to acquire Expedia Group. “As Dara has said, the best deal is not having to do a deal at all, and we are in that enviable position today,” he said.
Khosrowshahi later added that the company prefers to “build things organically” and that the company will be “disciplined in terms of those acquisitions because the bar for return on investment is quite high at our shop right now.”
In prepared remarks, Khosrowshahi said there are still “huge opportunities to increase consumer penetration,” including expanding into less dense markets and signs that fast, on-demand services are becoming an entrenched habit for more people. Mahendra-Rajah said the company’s performance thus far “should give investors confidence in our ability to deliver on our 2026 commitments.”
(Updates share move in first and fifth paragraph.)
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