Uber shares fall as fears over Lyft's pricing eclipse first operating profit

By Akash Sriram

(Reuters) -Uber's shares fell 6% on Tuesday after the ride-hailing company warned Lyft was competing effectively on prices and set an earnings forecast that analysts said may have disappointed investors who have driven up the stock two-fold this year.

The comments and an easing pace of revenue growth overshadowed the 14-year-old Uber's first-ever quarterly operating profit.

That also pushed down shares of Lyft nearly 5% on worries that the smaller rival could lose money by cutting prices on its rides.

"They've (Lyft) taken some tough actions, and they are competitive in pricing now," said Uber CEO Dara Khosrowshahi, calling Lyft a "tough competitor".

Uber forecast third-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) — a profitability metric keenly watched by investors — between $975 million and $1.025 billion. Analysts were expecting $925.9 million, according to Refinitiv data.

Lyft's aggressive pricing was threatening to ramp up competition after months of what could be described as a "cooperative duopoly", CFRA Research analyst Angelo Zino said.

"They (investors) are selling on the news right now. Expectations were pretty high going into Q2 results," he said.

REVENUE SLOWDOWN

Uber's revenue rose 14% to $9.23 billion in the second quarter but that came in slightly below estimates of $9.33 billion.

The rate of growth more than halved from the near 29% increase in the prior quarter and over 100% growth a year earlier.

Sales in the company's freight brokerage segment slumped 30% from a year earlier, hurt by a tough economy in which shipping prices and volumes remained under pressure.

However, the economic uncertainty and elevated levels of inflation buoyed driver numbers at Uber and Lyft as many sought opportunities to supplement their regular income.

Drivers for Uber's ride-share business grew by 33% from a year earlier.

Khosrowshahi said trips in the U.S. and Canada have returned to pre-pandemic levels and trips across Uber's markets during the quarter grew 22% to an average of 25 million trips per day.

Gross bookings, or the total dollar value from its services, is expected to be between $34 billion and $35 billion in the third quarter, compared with estimates of $34.13 billion.

Adjusted EBITDA margin as a percentage of gross bookings hit a record high of 2.7% in the second quarter, the company said.

Uber reported a profit of 18 cents per share, while analysts were expecting a loss of 1 cent.

Separately, the company said CFO Nelson Chai will leave on Jan. 5.

(Reporting by Akash Sriram in Bengaluru; Editing by Peter Henderson, Shounak Dasgupta and Sriraj Kalluvila)