Uber on Wall Street

Uber stock surges, but BP & Chegg fall: The Weekly Scoop

This week, Uber reports some killer earnings, educational tech company, Chegg, crashes as students flock to ChatGPT, and BP falls due to a slowdown in its share buyback scheme. It’s that time of week again folks, let's tuck into The Weekly Scoop!

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Uber up 23% thanks to stellar earnings 🚖

Uber stock, über gains: Uber reported its Q1 earnings on Tuesday and its revenue beat analysts’ expectations, coming in 29% higher than this time last year. CEO Dara Khosrowshahi said Uber is off to a “strong start”.

  • Revenue is up by $100m: Uber reported a quarterly revenue of $8.82bn vs. the $8.72bn expected by analysts, according to Refinitiv. Whilst Uber still isn’t a profitable company (crazy, I know), it does mean it only experienced a net loss of $157m, compared to a net loss of $5.9bn this time last year.

  • AI continues to move markets: Khosrowshahi also said Uber has a “significant data advantage” over its competitors regarding AI solutions. Uber is already using AI to predict “highly accurate” arrival times and to expedite the driver onboarding process. But apparently, “there’s much more to come”, which has investors excited.

Education company, Chegg, falls 47% thanks to ChatGPT 📚

AI strikes again: Chegg is a California-based company that helps students with their studying. The app and website offers step-by-step solutions to problems, provides access to textbooks, and even connects users with online tutors for extra help. But it seems ChatGPT is starting to hurt its sales.

  • Revenue is down: On Tuesday, Chegg reported its Q1 earnings. The share price plunged by almost a half when CEO, Dan Rosensweig, said “we now believe it’s [ChatGPT] having an impact on our new customer growth rate”. Chegg was shy of $16m in its quarterly revenue earnings.

  • CheggMate: Rosensweig attempted to calm investors by saying the technology would “advantage Chegg” over time, adding that the company was “embracing generative AI” with ‘CheggMate’, a new service built with ChatGPT-4 that enables students to access tailored content by talking to AI. Will customers go for it? Time will tell.

BP falls 8% as its share buyback scheme slows down 🛢️

Solid earnings, but investor confidence drops: BP’s Q1 earnings beat market expectations, but investor confidence appears to be shaken after its share buyback scheme slows down.

  • A £1bn slowdown: At the end of March, BP announced it would be buying back £2.75bn of its own shares, which investors felt pretty excited about. But just one month later, it announced it would now be buying £1.75bn of shares back. It seems investors are questioning why BP is feeling less confident in its own stock.

  • Beating market expectations: BP reported underlying profits (an internal calculation of profits) of £4bn for Q1. This exceeded analyst forecasts of £3.4bn, but was less than the £5bn recorded in for Q1 of 2022 after Russia’s full-scale invasion of Ukraine sent oil and gas prices soaring.

What have we learned this week? 🤓

  • Turnover is vanity, profit is sanity, but share price is reality: Famously, Uber isn’t a profitable company, yet this doesn’t affect how investors feel. Why? Because as long as investors see potential for growth, they’ll still invest. 

  • ChatGPT is causing stocks to move…again: It seems each week AI is at the heart of stock movements. Savvy investors will be thinking how stocks in their portfolio will be affected by AI, for better or for worse.

  • Good earnings aren’t always enough: Reporting strong earnings is what investors like to see. But slowing down your own share buyback scheme will cause investors to ask questions, and potentially sell their positions.

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*Figures correct as of May 3rd 2023.

Past performance does not guarantee future results. Capital at risk when investing.

This content is for educational purposes only. Shares does not provide investment advice. If you are unsure about anything, please seek advice from an authorised financial advisor.

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James Ashoo

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James has been investing for over five years. His aim is to explain the hard stuff, easily! When he's not chewing your ear off about stocks and crypto, he'll most likely be telling bad jokes.

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Harry Harrison

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