Stock Analysis

Uber (NYSE:UBER) is Hanging on the Plan for the Positive EBITDA

  •  Updated
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It seems that Uber Technologies, Inc.(NYSE: UBER) cannot catch a break. The stock has been steadily drifting lower for months, and soon it might close the gap up it made on Q3 2020 earnings report.

While the latest earnings report initially surprised, the market eventually realized that driver incentive created an EBITDA loss way higher than anticipated.

This article will look at the latest news around the stock and examine the current state of debt – as managing the debt is a high priority for a company that is not profitable yet.

Latest Developments

After posting a surprising profit of US$0.58 per share, the stock fell as driver incentives cut into EBITDA, making for a loss of US$509m vs. expectations at US$324.5m. The company maintains the goal to achieve adjusted EBITDA profitability in Q4 2021.

Meanwhile, the company is raising US$1.5b in Senior Notes at 4.50%, due in 2029. This new debt will fund the acquisition of Transplace by Uber Freight. The total value of the deal is US$2.25b.

Furthermore, the legal struggle in California keeps ongoing. Uber and its competitors spent hundreds of millions of dollars supporting Proposition 22, which exempted them from treating drivers as employees. However, California's Superior Court ruled it unconstitutional. While Uber and other companies that predominantly employ gig workers do not need to change their businesses immediately, this outcome is a major setback to the effort to create a form of hybrid employment – a middle ground between a contractor and an employee.

Check out our latest analysis for Uber Technologies

What Is Uber Technologies' Net Debt?

As you can see below, Uber Technologies had US$7.83b of debt in June 2021, which is about the same as the year before. Keep in mind that it just issued US$1.5b in new debt, which will show in our data after the close of this quarter.

On the flip side, it has US$5.00b in cash.

NYSE: UBER Debt to Equity History September 3rd, 2021

A Look At Uber Technologies' Liabilities

Zooming in on the latest balance sheet data, we can see that Uber Technologies had liabilities of US$7.68b due within 12 months and liabilities of US$12.8b due beyond that.

Offsetting these obligations, it had cash of US$5.00b as well as receivables valued at US$1.73b due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by US$13.8b.

Since publicly traded Uber Technologies shares are worth an imposing total of US$78.0b, it seems unlikely that this level of liabilities would be a major threat. Having said that, it's clear that we should continue to monitor its balance sheet lest it changes for the worse.

While the balance sheet is important, it is future earnings, more than anything, that will determine Uber Technologies' ability to maintain a healthy financial profile from now on. So if you're focused on the future, you can check out this free report showing analyst profit forecasts.

Over 12 months, Uber Technologies reported revenue of US$13b, which is a gain of 7.7%, although it did not report any earnings before interest and tax. We usually like to see faster growth from unprofitable companies, but each to their own.

Let the Buyer Beware

Over the last twelve months, Uber Technologies produced earnings before interest and tax (EBIT) loss. In total, it lost US$4.2b at the EBIT level.

The liabilities mentioned above do not give us much confidence that the company should be using so much debt. Since it doesn't help that it burned through US$2.5b of cash over the last year, we think it is risky. It is certainly not the worst, but it leaves a lot to be desired. The eyes are now set on the company's promise to deliver positive EBITDA by the end of the year.

There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. Be aware that Uber Technologies is showing 1 warning sign in our investment analysis, you should know about...

Sometimes, it's easier to focus on companies that don't even need debt when all is said and done. Readers can access a list of growth stocks with zero net debt 100% free right now.

Valuation is complex, but we're helping make it simple.

Find out whether Uber Technologies is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

Simply Wall St analyst Stjepan Kalinic and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Stjepan Kalinic

Stjepan Kalinic

Stjepan is a writer and an analyst covering equity markets. As a former multi-asset analyst, he prefers to look beyond the surface and uncover ideas that might not be on retail investors' radar. You can find his research all over the internet, including Simply Wall St News, Yahoo Finance, Benzinga, Vincent, and Barron's.


Uber Technologies

Uber Technologies, Inc. develops and operates proprietary technology applications in the United States, Canada, Latin America, Europe, the Middle East, Africa, and the Asia Pacific.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Future Growth5
Past Performance0
Financial Health3

Read more about these checks in the individual report sections or in our analysis model.

High growth potential and fair value.