Uber Technologies, Inc. (UBER) is trading lower by more than 3% on Friday in pre-market after reporting a larger-than-expected second-quarter 2020 loss of $1.02 per share. Revenue fell 29% year on year to $2.24 billion, slightly beating the $2.18 billion consensus, underpinned by a 113% increase in delivery services. However, the share of income has fallen a staggering 56% year on year, highlighting consumers ‘ caution could persist until the pandemic runs its course.
- Uber has brought in more than expected in the second quarter of 2020 loss.
- Dynamic growth in delivery services, partially offset bearish carpool numbers.
- The car-sharing industry is facing a major threat from a new California law.
Uber and rival Lyft, Inc. (LYFT) are the defense of a complaint filed by the California Labor Commissioner’s Office looking to apply a new law designating the drivers as employees rather than independent contractors. The stakes are high, with the car-sharing business model depends on the independent contractor status. Uber is looking for diversification to reduce the risk, highlighted by the July acquisition of Postmates in a transaction scheduled for 2021.
The term business model refers to a business plan for making a profit. It identifies the products or services the company plans to sell, its target market, and all anticipated expenses. The business models are important for both new and established business.
Uber came public at $42.00 in May 2019 and entered into a brief of the upward trend, which has posted a record high of $47.08 in June. The corollary, as the recession cut through the ipo of the opening print in August, initiating a downward trend that found support in the middle of$20 in November. The buyers have taken control by 2020, but the increase was off the hook again the resistance, the sculpture of a low-top, before a pandemic swoon that has broken out in 2019 support in March.
A rebound in the second quarter, the reassembly of the broken support in the middle of$20, the fixing of a trading floor, which could be tested in the coming months. The stock displayed a period of three months above the .786 Fibonacci sale retracement level in June and eased into a rectangle consolidation with the closely aligned 50 and 200 days exponential moving averages (EMAs). Friday’s reversal to the resistance of the range raises the chances for the sale of the pressure in the range of support near $30.
The balance volume (OBV), the accumulation-distribution indicator reached a new record of February, and rode in a distribution of the wave which is completed in 2019 the bottom in March. Health buying pressure reaches the prior high in June, in front of a holding company in this week’s confessional. OBV has now completed a cup and handle pattern, with an accumulation above the red line of support for prices in the high $30 or low $40s.
A cup and handle pattern on the security in the price chart is a technical indicator that looks like a cup with a handle, where the cup is in the shape of a “u” and the handle has a slight downward drift. The cup and handle is considered to be a bullish signal, with the right side of the model generally experience a lower volume of transactions.
Lyft reports earnings on Aug. 12, with analysts expecting a loss of $0.97 per share on $338.75 million in the second quarter of 2020 sales. The creation of the public company, to $87.24 in March 2019 and has posted a record high of $88.60 in this session, before a sharp drop which found support in the mid$30 in October. A little ahead, 2020 was sold aggressively in February 2020, which gives a distribution which has posted an all-time low at $14.56 in March.
The second quarter uptick reversed to the distribution of support in June, the strengthening of the resistance in the mid$30, in advance of aggressive selling, which has relieved the pressure in the upper part of $20 in July. The stock has built a small base at that price level and could break down on a high volume if the car-sharing company, reports a little more than the expected loss. Even more disturbing, the accumulation of readings are much worse than those of his rival, and can easily go down to the March lows after negative catalysts.
The Bottom Line
Uber’s mixed second quarter are the settings to put the pressure on rival Lyft next week the presentation of the results.
Disclosure: At the time of publication, the author held Uber shares in a family account, but no positions in the other aforementioned securities.