Ridesharing rivals: Uber and Lyft Q1 earnings preview

​The Covid-19 pandemic hasn’t been kind (to say the least) to ridesharing companies like Uber and Lyft, and hence it came as no surprise to see their respective share prices take a hit over a year ago when lockdowns were first put in place for its key markets. Since then however, it’s been a story of reopening, and in turn long-term recovery when it comes to share prices, especially following successive vaccine news late last year, and more so for Lyft that relies more on the riding than Uber’s more diversified strengths.

So much has demand increased that both companies have had to offer incentives for US drivers as supply lags, earnings for drivers now above pre-pandemic levels. The one issue remains the classification of workers and not just in the UK following its decision earlier this year that classified Uber drivers as such, but in the US following comments from its labor secretary last week that 'in a lot of cases gig workers should be classified as employees' that sent share prices of both companies plummeting.

When do Lyft and Uber announce their results?

And it isn’t just their core business that the two have in common, as they’ll both be releasing their figures this week, Lyft going first on Tuesday 4 May, while Uber is the day after that.

Lyft share price: forecasts from Q1 results

Although the company managed to beat estimates last time around on the earnings per share (EPS) front, it’s been a story of successive losses, and that’s expected to remain this case for the first quarter (Q1) of the year, even if hopes are it’ll be a smaller loss of -$0.53 per share. And while it recently sold off its self-driving unit for over half a billion dollars to Toyota, it won’t appear in earnings for this quarter given it occurred afterwards. Analyst ratings remain majority buy, with price targets averaging above its current share price.

Trading Lyft’s Q1 results: technical overview and trading strategies

When it comes to volatility, it’s Lyft on average that’s been experiencing more of it. That means up days for ridesharing offers decent gains for Uber’s share prices and more so for Lyft, but also meaning that on days of retracement the likes of which we saw late last week (and especially given its exposure to the US market on the latest comments from the labor secretary as opposed to Uber that’s more diversified globally), it’s the latter that suffers a bigger percentage drop. Of course, they aren’t always pointing in the same direction, a theme that’ll likely preside should there be a real contrast in earnings from the two rivals this week.

And it’s for that reason that the technical overviews can at times differ, even if they end the day pointing in the same direction. The technicals on the longer-term weekly time frame are mixed in terms of price with respect to their short and long-term weekly moving averages, and both showing a trending average directional movement index (ADX). And while the picture might appear similar when zooming into the daily time frame, the increased volatility for Lyft is showing a relative strength index (RSI) moving closer to oversold territory, and its price not just piercing the lower end of the Bollinger band – as is the case with Uber’s share price – but showing signs of walking it. Technicals mean little in the face of a fundamental event, and that means levels are easily at risk of breaking especially if results veer far from expectations, and would potentially give conformist breakout strategies that outperformed last week an edge over contrarian reversals.

Lyft shares daily chart

Uber share price: forecasts from Q1 results

After beating estimates slightly on the earnings front over the past two quarters, expectations are for another loss and an EPS of $-0.56, ride volumes expected to be lower than pre-pandemic numbers but where its delivery business may show a decent figure. Uber’s recent announcement in March regarding record gross bookings has been a clear positive, but the negative over the past quarter is taking into consideration the UK’s classification for its drivers as workers.

Analyst price targets vary widely, with an average well above current prices as most recommend a buy, and by a clearer margin than that for Lyft.

Trading Uber’s Q1 results: technical overview and trading strategies

Here too, technicals, and in turn its overview and levels will hold less relevance going into Tuesday’s fundamental event. That being said, the overview is consolidatory, in the short-term its price at the lower end of the band, beneath its key moving averages, and with a negative directional movement index (DMI). A lack of news might have seen conformist strategies outperform, but given we could be in for another big move on the release and that means contrarian breakout strategies can’t be ruled out. A cautious approach for contrarian traders would be to wait for key levels to break/breach significantly before initiating only if price recovers to that level.

Uber shares daily chart