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    Uber’s stock surges on positive trends despite big Q2 loss

    AP – Uber’s effort to meld its pioneering ride-hailing service with food and freight delivery showed progress during the past quarter even though the company sustained a huge loss stemming from a sharp decline in its outside investments.

    Looking past Uber’s second-quarter (Q2) loss of USD2.6 billion announced on Tuesday, Wall Street celebrated a significant milestone that raised hopes that Uber is on the verge of becoming a self-sustaining business.

    The good news arrived on Tuesday in the form of a key metric known as free cash flow. Uber generated USD382 million in cash during the April-June period, the first quarter in the company’s 13-year history that it did not haemorrhage money.

    Uber has now been profitable for four consecutive quarters under a financial yardstick called EBIDTA, or “adjusted earnings before interest, taxes, depreciation and amortisation”.

    By that measure, Uber earned USD364 million during the Q2, breezing past industry analyst projections of USD277 million, according to FactSet Research.

    Uber still sustained a massive loss that translated into USD1.33 per share primarily caused by declines in Uber’s stake in Aurora, a self-driving car company, and a Singapore transportation service called Grab.

    CEO Dara Khosrowshahi said on Tuesday that he is confident the company will build upon its momentum and possibly surpass a previously set goal of generating USD1 billion in free cash flow annually.

    Uber logo shown on screen at the New York Stock Exchange. PHOTO: AP

    Khosrowshahi said he now believes Uber is in its strongest position since he was hired as the company’s top executive nearly five years ago. Khosrowshahi took over after co-founder Travis Kalanick was pushed out amid a series of scandals.

    Shares of Uber Technologies Inc, based in San Francisco, jumped nearly 19 per cent to close on Tuesday at USD29.25. The stock is still down by 30 per cent this year, and far below its peak of about USD64 reached early last year.

    The downturn largely reflects ongoing scepticism about whether Uber will be able to keep charging high enough prices for rides and food delivery to consistently make money over the long term.

    Through most of its history, Uber had been able to lure customers to its services with low prices that were subsidised by the billions of dollars that it raised from venture capitalists and other investors before becoming a publicly traded company in 2019.

    Less than a year later, the pandemic hit and demand evaporated as government lockdowns corralled millions at home and people stopped driving.

    Uber’s ride-hailing service has now surpassed its pre-pandemic levels, even though Khosrowshahi told analysts on Tuesday that demand remains suppressed in several major United States (US) cities such as San Francisco, Los Angeles and Seattle where large numbers of people continue to work remotely.

    Elsewhere, passengers are returning to Uber in droves and appear willing to pay for the higher fares that the service is charging even in the face of soaring inflation.

    Passengers took a total of 1.87 billion trips on Uber during the spring and early summer, a 24 per cent increase compared with the same time last year.

    That’s about 21 million trips per day, on average. The volume also surpassed the 1.68 billion passenger trips that Uber provided during the Q2 of 2019 before the pandemic upended everything.

    Wedbush Securities analyst Daniel Ives said the Q2 suggests Uber can “produce profits while navigating inflationary pressures and pockets of driver shortages that still linger in some cities”.

    The surge in ridership helped Uber more than double its revenue from the same time last year to nearly USD8.1 billion.

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