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Uber posts mixed results in its first quarter as a public company

Revenue is slightly up, but the ride-hailing company still posts more than a $1 billion loss.

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Uber hasn't been getting a free ride from the stock market.

Angela Lang/CNET

Uber hit the stock market three weeks ago in one of the biggest IPO busts in Silicon Valley history. And its first-quarter earnings, released Thursday, didn't indicate how things are going to improve anytime soon.

The ride-hailing company posted a loss of $2.26 per diluted share, which is wider than the $1.46 average forecast by analysts surveyed by Yahoo Finance. That means Uber reported a more than $1 billion net loss for the quarter. 

Uber's revenue for this quarter was up, however. It totaled $3.09 billion, better than the $3.08 billion analysts had forecast and up 20% from the same period last year. Uber also showed an increase in gross bookings, up 34% from the same period in 2018.

The mixed performance stands in contrast to Uber's larger-than-life reputation just a few months ago, when it was the world's most highly valued private company. Before listing its shares, the ride-hailing giant had raked in $14.9 billion in investments and was worth $76 billion. Last fall, bankers estimated Uber's valuation could've been as much as $120 billion by the time it debuted on Wall Street.

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At Thursday's market close Uber's valuation was down to $66.9 billion, with shares trading at $39.80 apiece -- 11.5% lower than its $45-a-share price from before trading started at its IPO.

The falling stock price means Uber CEO Dara Khosrowshahi has his work cut out for him if he hopes to get the $100 million bonus he's reportedly slated to receive if the company hits a $120 billion valuation and maintains it for 90 days.

"While it is still a Godzilla-like organization in scale, the valuation was out of whack and they're struggling with maintaining growth," said Eric Schiffer, CEO of private equity firm the Patriarch Organization.

Uber's mixed performance could also bode poorly for competitor Lyft, which went public at the end of March and has also seen its shares slide. Investors may be questioning whether ride-hailing is a viable business that can generate meaningful profits. In SEC filings, both Uber and Lyft said they've never been profitable and might never be.

"Right now, it's opaque and you're betting on these companies becoming profitable," Schiffer said. "That's a long way away, if ever." 

Khosrowshahi appears undeterred, however. In an earnings call following the market's close on Thursday, he said the company's IPO was an "important moment for Uber" but "just one moment in a much longer journey."

In an email Khosrowshahi sent to Uber employees the day after trading kicked off, he said the company's long-term performance is what matters.

"Like all periods of transition, there are ups and downs," Khosrowshahi wrote. "Remember that the Facebook and Amazon post-IPO trading was incredibly difficult for those companies. And look at how they have delivered since."

It could be more than just profitability affecting investor confidence in Uber. Drivers, for example, have been unhappy with lower pay and longer working hours over the past couple of years. Two days before Uber's IPO, drivers held worldwide protests over the disparity of wealth between themselves and company employees.

Internal shakeups could also be a factor. Ryan Graves, Uber's first employee and first CEO, stepped down from the company's board of directors last week. The news was quietly released in an SEC filing. Ron Sugar, Uber's independent chairperson of the board, called the move a "bittersweet moment."

Still, some analysts are optimistic about Uber's potential.

"Uber's first few weeks since going public have not been the storybook tale that Uber management and investors had hoped for," Ygal Arounian, a Wedbush securities analyst, wrote in a research note Tuesday. Yet, "we continue to see Uber as well positioned to capture a $5.7 trillion opportunity globally on transportation."

Khosrowshahi reiterated this sentiment in the earnings call.

"Our story is simple," he said. "We're the global player."

Originally published May 30, 1:32 p.m. PT.
Update, 3:07 p.m.: Adds additional information.