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Uber Stock Plummets Due To Diminished Ride-Share Demand, Impacting Q2 Projections

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Uber (UBER.N) faced an unexpected quarterly deficit and projected gross bookings below the predictions of Wall Street, causing its shares to plummet by 9% and setting the ride-share and food delivery giant on track to lose over $10 billion in market capitalization.

This disappointing outlook from Uber sharply contrasted with the optimistic guidance provided late on Tuesday by its smaller competitor Lyft (LYFT.O), which saw its shares rise by 8%.

While Lyft boasted strong quarterly performance, benefiting from a broader industry resurgence in demand, Uber’s results indicated a slowdown in growth compared to 2023, a year in which it achieved its first annual profit by dominating the U.S. ride-share market and delivery sector.

Uber’s shortfall extended to first-quarter gross bookings, a pivotal metric reflecting the total transaction value on its platform. CFO Prashanth Mahendra-Rajah attributed this shortfall to subdued ride-share demand in Latin America and the effects of certain holidays shifting into the first quarter.

Operating in approximately 70 countries, Uber offers a range of services, including meal deliveries and freight booking, and maintained a 72% share of the U.S. ride-hailing market in the March quarter, up from 68% two years earlier, according to YipitData.

In contrast, Lyft, a notably smaller entity, focuses solely on ride-hailing operations within the United States and parts of Canada. Uber reported a net loss of $654 million, attributed to legal charges, provisions, and fair valuation adjustments of specific company investments, diverging significantly from analysts’ expectations of a net profit of $503.1 million.

Lyft, under new CEO David Risher since April, is aggressively pursuing market share from Uber, particularly in the North American market. Through substantial cost-cutting measures and service improvements, Lyft has successfully attracted users with shorter wait times and competitive pricing.

Uber’s second-quarter gross bookings forecast fell in the range of $38.75 billion to $40.25 billion, below the anticipated $40.04 billion. Gross bookings for the quarter ending March 31 reached $37.65 billion, narrowly missing expectations of $37.92 billion. Although revenue increased by 15% to $10.13 billion, slightly exceeding the estimated $10.11 billion, Uber reported an adjusted loss of 32 cents per share, contrary to expectations of a 23-cent profit.

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