Ride-hailing rivals Uber and Lyft are on a downhill drive on the stock market after releasing their latest earnings. Uber shares were down 8 per cent at lunchtime in New York on Wednesday, while Lyft’s had lost nearly a third of their value.
Lyft had disappointed with projected operating earnings falling short of Wall Street expectations because of higher driver pay. In contrast, Uber’s outlook beat expectations and it reported revenue growth of 136 per cent to $6.9bn for the first quarter, with adjusted earnings of $168mn, both numbers being ahead of analysts’ forecasts.
“After more than two years of persistent and sometimes unpredictable impacts to our business, our results make clear that we are emerging on a strong path out of the pandemic and that the power of our platform is differentiating our financial performance,” said Uber’s chief executive Dara Khosrowshahi.
However, net losses at the group leapt from $108mn a year ago to $5.9bn, largely because of unrealised losses related to its minority stakes in other companies, such as Chinese ride-hailing company Didi.
Uber received a 20 per cent stake in Didi when it sold its local operations to it and quit the Chinese market in 2016. Its holding was down to 12 per cent but was worth $8bn when Didi raised $4.4bn in a New York IPO last June.
The stock has fallen more than 85 per cent since then. Chinese authorities opened a national security investigation into Didi just two days after the listing and forced domestic app stores to remove all of the group’s core services.
As Ryan McMorrow reports, the US Securities and Exchange Commission is now investigating the botched IPO. Didi said it was “co-operating with the investigation, subject to strict compliance with applicable [Chinese] laws and regulations”.
News of the SEC probe sent Didi’s shares sliding a further 7 per cent in after-hours trading.
Hong Kong-listed shares in Chinese tech companies had a bad day generally, pushing the Hang Seng Tech index down 3.3 per cent.
The Internet of (Five) Things
1. Just Eat Takeaway chair steps down
Hours before its annual meeting on Wednesday, Just Eat Takeaway’s chair Adriaan Nühn bowed to shareholder pressure and agreed to step down. The food delivery company also said it was investigating a “formal complaint” against chief operating officer Jörg Gerbig relating to “possible personal misconduct at a company event”.
2. US set to target China’s Hikvision
The US is moving towards imposing hard-hitting sanctions on Hikvision, the Chinese surveillance camera company accused of enabling human rights abuses. Any measures would have ramifications for the more than 180 countries that use the company’s cameras.
3. Airbnb’s sunny outlook
Airbnb gave a forecast for revenue in the current quarter that easily surpasses Wall Street’s estimates, with the company seeing “substantial demand” for post-Covid travel heading into the busy summer season. Lex says the room rental platform is expected to report its first year of positive net income in 2022.
4. Alibaba’s Taobao Deals takes off
Alibaba launched its Taobao Deals app two years ago in order to target shoppers in smaller, less affluent Chinese cities. Sales growth has been slowing on its more upmarket platforms, but the company says Taobao Deals has turned into a “powerhouse in new user acquisition for China commerce”.
5. Lego builds virtual brick business
Lego plans to triple its number of software engineers, as the world’s largest toymaker embraces an online world it has long feared could erode the appeal of its physical bricks. Lego’s chief executive Niels Christiansen said the Danish group was increasing its software investments to several hundred million dollars and no longer viewed its physical and digital products as separate.
Tech tools — Norco, a Southern Gothic adventure game
Though it seems distinctly retro in the age of epic open-world blockbusters, the humble point-and-click adventure game has given us two of the most brilliant games of the past decade, Kentucky Route Zero and Disco Elysium, writes Tom Faber.
These occupy a continuum with Norco, as all three offer first-rate writing, memorable characters and a penchant for using magical realism to reflect insightfully on our own world. Norco’s writing nods to Southern Gothic authors such as William Faulkner and Cormac McCarthy alongside genre writers Raymond Chandler and William Gibson.
Looking at a vehicle in your garden, you are told: “This truck was your grandfather’s. You remember riding in his lap while he let you steer. The dead wasps that collected behind the seat. The smell of grease, whiskey and nicotine.” This terse, stylish language is studded with sharply observed local vernacular and occasional bouts of impressionistic poetry, Faber explains.