Strong profit growth drives Uber’s shares higher

Today’s headlines

What’s happening: Shares of Uber Technologies rose sharply on Tuesday, after the company released results for the second quarter.

What happened: The ridesharing giant reported better-than-expected results for the second quarter.

Uber said its net income more than doubled in the latest quarter, while gross bookings jumped 19% year-over-year.

How were the results: The San Francisco, California-based company reported low double-digit growth in sales for the second quarter ending June.

• Revenues grew 16% year-over-year to $10.70 billion, beating consensus estimates of $10.57 billion.
• GAAP earnings came in at 47 cents per share, surpassing Wall Street expectations of 31 cents per share.

Why it matters: Side-sharing companies, including Uber and Lyft, witnessed an increase in overall business as more people began stepping out of their houses and returning to their offices.

Revenues from Uber’s ride-sharing division surged 25% year-over-year to $6.13 billion in the second quarter. The company’s delivery business generated revenues of $3.29 billion, up 8%, while revenues from Freight came in flat at $1.27 billion.

Gross Bookings surged 19% year-over-year to $39.95 billion, beating market estimates of $39.7 billion. Mobility Gross Bookings also jumped 23% to $20.55 billion, while Delivery Gross Bookings gained 16% to $18.13 billion. Freight Gross Bookings came in flat at $1.27 billion.

Trips increased by 21% year-over-year to 2.8 billion, while Uber’s Monthly Active Platform Consumers rose 14% to 156 million.

“Uber’s growth engine continues to hum, delivering our sixth consecutive quarter of trip growth above 20 percent, alongside record profitability,” CEO Dara Khosrowshahi, said during the earnings call.

Management guided to gross bookings of $40.25 billion to $41.75 billion for the third quarter, while projecting adjusted EBITDA of $1.58 billion to $1.68 billion.

How shares responded: Uber’s shares jumped 10.9% to close at $64.87 on Tuesday, following the release of quarterly results. The stock has lost around 9% over the past month.

What to watch: Investors will continue monitoring the overall growth in the US and global economies. Inflation levels will also be in focus.

The markets today

The British Pound will be in focus today ahead of the release of the house price index

Context: The GBP/USD forex pair moved lower on Tuesday, after recording sharp gains in the previous session.

Details: The British currency had risen sharply during Monday’s session after the Office for Budget Responsibility projected a higher-than-expected decline in public borrowing. A selloff in the US dollar provided a further boost to the sterling on Monday.

Last week, the Bank of England lowered its benchmark interest rates by 25 basis points to 5%.

On the economic data front, the S&P Global UK construction PMI surged to a reading of 55.3 in July, from 52.2 in June. The figure also surpassed market views of 52.7, signalling an expansion in the region’s construction activity.

The US dollar recovered from a six-month low level on Tuesday, which exerted pressure on the GBP/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.3% to 102.97.

The GBP/USD forex pair fell around 0.7% to 1.2691 on Tuesday. London’s FTSE 100 rose 0.23% to close at 8,026.69, mirroring the gains in US equities.

What to watch: Investors await the release of economic data on UK’s Halifax house price index today. The Halifax house price index had declined by 0.2% in June and is expected to increase by 0.3% in July. On year-over-year basis, the index is projected to increase by 1.2% in July, following a 1.6% gain in the previous month.

Other Markets: European indices closed mostly higher on Monday, with the DAX 40 and STOXX Europe 600 Index up by 0.09% and 0.29%, respectively, and the CAC 40 down by 0.27%.

The news shaping the markets

Ukraine said it had shot down all 24 drones launched by Russia targeting different regions across the country. The news sent the safe-haven US dollar index higher in forex trading this morning.

Philippines’ manufacturing production grew by 2.2% year-over-year in June. This marked an easing from the 2.3% rise recorded in the earlier month, which exerted pressure on the PHP/USD forex pair.

Australia’s Ai Group Industry Index for the manufacturing sector improved by 7 points to a reading of -19.5 in July, which sent the AUD/USD pair higher in forex trading this morning.

Brazil’s trade surplus contracted by 6.6% year-over-year to $7.64 billion in July. However, the latest reading came in-line with market estimates of $7.7 billion, lending support to the BRL/USD forex pair.

The American Petroleum Institute said that US crude oil inventories had risen by 0.18 million barrels in the week ending August 2, compared to a decline of 4.495 million barrels in the prior week, sending the WTI crude oil prices lower this morning.

What else to watch today

Germany’s balance of trade and industrial production, South Africa’s foreign exchange reserves, France’s foreign exchange reserves, Singapore’s foreign exchange reserves, US MBA mortgage applications, crude oil inventories, gasoline stocks change, distillate stocks, Manheim used vehicle value index and total consumer credit, Russia’s foreign exchange reserves, Canada’s Ivey Purchasing Managers Index, Turkey’s treasury cash balance, Japan’s foreign exchange reserves, China’s foreign exchange reserves, India’s money supply M3, as well as Brazil’s car production and new vehicle sales.