Markets

Stock Market News: Uber Drives Lower; Peloton Shares Hit the Skids

Wall Street saw a mixed open on Tuesday morning as market participants tried to assess some countervailing factors affecting their expectations on the geopolitical and macroeconomic fronts. Encouraging signs in the trade relationship between the U.S. and China kept lifting overall confidence, but some concerns about the speed with which the major benchmarks have jumped toward record highs has some worried about rising levels of exuberance. As of 11 a.m. EST, the Dow Jones Industrial Average (DJINDICES: ^DJI) was up 25 points to 27,487. However, the S&P 500 (SNPINDEX: ^GSPC) fell 3 points to 3,075, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was lower by 2 points to 8,431.

Investors continued to look at earnings results for hints about the economy's near-term future, and a couple of recent IPOs weighed in with their latest numbers. Uber Technologies (NYSE: UBER) was down significantly as shareholders assessed the ride-hailing service's latest metrics, while Peloton Interactive (NASDAQ: PTON) made its first quarterly report as a public company and saw some share-price volatility as a result.

Uber can't get traction

Shares of Uber Technologies were down almost 7% Tuesday morning after the release of its third-quarter financial report late Monday. The ridesharing company said that revenue grew 30% during the period compared to the year-earlier quarter, with solid gains in gross bookings and number of trips as well.

Gray car with Uber labels and autonomous driving system on roof.

Image source: Uber.

However, some investors weren't satisfied with Uber's growth rate in active platform consumer counts. Uber counted 103 million active users on a monthly basis during the quarter, and that's up from 82 million this time last year. Yet it also suggests that there's a limit to Uber's addressable audience at least at present, and some fear that growth rates could slow in the future.

Also, Uber reported a 67% jump in losses in its Uber Eats segment, and its Freight segment saw losses more than double year over year. Those higher losses, along with greater spending on overhead expenses and research and development, ate into the improved performance from the core Rides segment.

Many investors have high expectations for Uber, and the stock's disappointing performance since its IPO has made shareholders doubt whether the company will deliver on its full potential. In particular, until Uber can show a clear pathway toward overall profits, its stock could see continued volatility.

Peloton drops off the back

Meanwhile, shares of Peloton Interactive were down 6%. The interactive fitness platform provider reported its fiscal first-quarter financial report, and although the company showed strong signs of growth in many areas, investors weren't able to dispel all their worries about its future.

Peloton's report included some amazing numbers. Sales more than doubled along with its count of connected fitness subscribers, and the company counted more than 1.6 million members among those using its platform. Retention rates remained strong at 94%, and engagement levels among subscribers rose, with a more-than-30% increase in the average number of monthly workouts per subscriber.

However, Peloton made only incremental progress on the bottom line. Net loss came in at $49.8 million, narrowing its loss number from a year ago by just $4.8 million.

Going forward, a lot will depend on Peloton's efforts to cater to a larger mass audience. Moves like its free trial promotions could drive subscriber growth, but they could also add more costs if the company isn't successful in converting those trial users into subscribers. The old paradigm of driving growth at all costs has shifted toward a greater emphasis on profitability, and that could force Peloton to move more quickly than it'd like so soon after its IPO.

10 stocks we like better than Uber Technologies
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Uber Technologies wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of June 1, 2019

 

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

UBER PTON

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More