Uber Reports First Quarter Profits Wednesday: Here's What Wall Street Is Watching

Uber will report first-quarter earnings after Wednesday's bell, and Wall Street's notes to investors provide an idea of ​​what investors can expect.

The latest financial reports come after what seemed challenging for the company. The stock is down more than 26% this year as inflation challenges consumers, the spread of the Omicron coronavirus variant, and rising gas prices weigh heavily on the stock.

Uber has arguably recovered from all the omicron driver lows. In a March filing with the SEC, Uber said demand for mobility increased significantly in February. The trip rebounded 90% from February 2019 levels, prompting the company to trim its first-quarter EBITDA lead by $25 million in the mid-range from $100 million to $130 million to $130 million to $150 million - a dollar increase.

"Unlike most other internet sub-sectors, Rideshare Q1 results should be solid against continued mobility trends," said analysts at Alliance Bernstein in an earnings report. However, investors will be wary of the regional recovery trend as APAC growth is likely to lag behind Covid. According to analysts, European markets could also be hit hard by the war and inflation.

As gas prices soared across the country because of the war in Ukraine, many feared drivers would leave their concert jobs for other jobs. In addition, some providers and co-travelers have struggled with supply and demand imbalances caused by the pandemic, so tensions or other failures could impact financial performance.

For its part, Uber has introduced a temporary fuel tax. This is coming to an end, so investors will be watching the colors to see if this will hold back the drivers and whether companies plan to extend stimulus. According to AAA, gas prices averaged $4.19 a gallon Monday, up from $2.9 a year ago.

However, many drivers believe the additional costs are not enough, and some analysts say the restoration of driver supply has been delayed. "We believe there is an increased supply and acceptable risk for drivers as our fare tracking data shows that travel fares and waiting times increased in April compared to the first quarter," Bank of America analysts said.

As mobility increases, high gasoline prices and rebalance supply and demand may require Uber to provide additional short-term incentives for drivers.

The company spent millions of dollars to get drivers back last year as states relaxed Covid restrictions and vaccinations became widespread. But the stimulus is weighing on the balance sheet, and investors are constantly worried about costly attempts to get drivers back.

"For the second quarter, there is a risk that Uber may need to add short-term driver incentives to match the positive recovery in gas demand and prices," wrote Bank of America analysts. However, the stimulus may not be as expensive as in 2021, analysts at Allianz Bernstein speculate.