Uber Technologies pointed to a further slowdown in its mainstay app-based taxi business as it forecast fourth-quarter gross bookings below Wall Street estimates, sending its shares down 11% by Thursday afternoon.
Bookings growth, a key measure of ridership for online taxi operators, slowed to a more than one-year low in the third quarter and also fell short of analysts’ forecasts.
Shares of rival Lyft, which is set to report quarterly results next week, fell 5.3%.
Uber’s outlook underlined concerns about weakening demand in the ride-hailing industry in recent quarters as an uncertain economy and high inflation weigh on commuters.
“High interest rates have taken their toll on consumers, who’ve also had to cope with higher prices right across their finances and some are now looking to cut back on unnecessary spending,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“It’s likely that there’s been a bit of a shift towards cheaper modes of transport.”
The company, the dominant player in the North American ride-sharing market, sees suburban areas both in the U.S. and elsewhere as a next growth driver amid worries about market saturation.
“It’s a common misconception that almost everyone already uses Uber,” CEO Dara Khosrowshahi said in prepared remarks.
He said the company plans to capture suburban markets through better pricing strategies for longer distances and by focusing on features that allow people to wait and reserve rides in these areas.
Gross bookings for Uber’s mobility business grew 26.4%, with user engagement hitting an all-time high. Overall revenue for the third quarter came in at $11.19 billion, beating the average analyst estimate of $10.98 billion.
Net income attributable to Uber stood at $2.61 billion in the third quarter, including a $1.7 billion pre-tax gain related to the company’s equity investments, while operating profit was a record $1.06 billion.
Adjusted earnings before interest, taxes, depreciation and amortization — a closely-watched profitability metric – came in at $1.69 billion, compared with analysts’ average estimate of $1.64 billion.
The company forecast fourth-quarter adjusted EBITDA to come in between $1.78 billion and $1.88 billion versus analysts’ expectation of $1.84 billion.