Uber takes hit as weekend customers spoil the party

Ride bookings and delivery orders at Uber Technologies fell short of expectations in the third quarter as cautious American consumers rein in their leisure spending.
Bookings growth slowed in the third quarter and missed analysts’ forecasts, dragging shares in the app-based taxi business sharply lower on Thursday.
Dara Khosrowshahi, chief executive of Uber, told investors that the US, which accounts for about half of bookings, had seen pressure on demand for rides because of higher insurance costs being passed on to customers. The slowdown has been notable in states such as New Jersey and California, where insurance price rises have been particularly high, he said.
Weekend bookings growth has been slower than weekday growth, as customers return to offices but show caution on leisure spending. “I think the weekend party hours, maybe consumers are a little more price sensitive in terms of whether they choose to go out or not,” Khosrowshahi said.
Gross bookings, which include ride hails, delivery orders and driver and merchant earnings, rose 16 per cent year-on-year to $41 billion. That was down from growth of 20 per cent and 19 per cent in the first and second quarters respectively.
Uber’s shares fell $7.32, or 9.2 per cent, to $72.11 in morning trading in New York.
The results also weighed on shares in Lyft, a rival taxi-hailing app, which fell $0.42, or 3.1 per cent, to $13.25.
Trips during the third quarter, which covers the three months to the end of September, grew 17 per cent to 2.9 billion, or around 31 million trips per day on average.
Growth in bookings has been driven by the UK, Argentina and Germany, which Uber attributed to robust driver growth, and demand for a range of vehicles and services, including taxis, motorcycles and scheduled rides.
Khosrowshahi said Uber has the potential to expand into suburban areas in the US and abroad.
“As the largest global rideshare platform, it’s a common misconception that almost everyone already uses Uber,” he said.
“However, in the US alone, we estimate that 45 per cent of the population lives in places without reliable on-demand service, leading to longer wait times and unfulfilled trips. Our scale and relative category position place us in the best position to take advantage of this enormous opportunity.”
Khosrowshahi said there was a “massive opportunity to both attract new users to Uber Eats and increase engagement among existing users”. In September, monthly active users of Uber Eats exceeded 50 million for the first time.
Overall revenue for the third quarter came in at $11.19 billion, beating the analysts’ average estimate of $10.98 billion.
Adjusted earnings before interest, taxes, depreciation and amortisation, a metric followed closely to assess profitability, came in at $1.69 billion, slightly ahead of expectations of $1.64 billion.
For the fourth quarter, Uber expects gross bookings in the range of $42.75 billion to $44.25 billion, which represents year-on-year growth of between 16 per cent and 20 per cent.