The company also revealed a financial assistance program for drivers and delivery people, which it expects will reduce GAAP Revenue by an estimated $17-$22 million in Q1 and $60-$80 million in Q2.
In addition, Uber also expects to record an impairment charge against the carrying value of some of its minority equity investments. “We believe these investments will be reduced by an estimated range of $1.9 to $2.2 billion during the three months ended March 31, 2020” says the statement.
Following the announcement, SunTrust Robinson analyst Youssef Squali reiterated his support for the stock. “While short-term visibility is clouded by questions around the length and depth of the crisis, we maintain our long-term bullish stance” he wrote.
He was not surprised by Uber’s decision to pull its guidance, writing that he already materially lowered estimates back in March as a result of the worsening Covid-19 situation.
However, according to Squali, Uber 1) has strong financial liquidity even under an 80% drop in GBs scenario for Rides for rest of FY20, 2) has a mostly variable cost model to protect short-term margins, 3) has seen sustained Eats growth, and 4) could benefit from consolidation post- pandemic.
Squali currently has a buy rating on the stock and $42 price target. This reflects the overall Street consensus of Strong Buy, with an average analyst price target of $43 (60% upside potential). (See UBER stock analysis on TipRanks).
Uber also announced that it will hold its quarterly conference call to discuss its financial results for the first quarter of 2020 on Thursday, May 7, 2020, at 1:30PM Pacific Time.
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