Uber Exceeds Q2 Earnings and Revenue Expectations

LOCAL MARKET COMMENTARY

On the Johannesburg Stock Exchange, the blue-chip Top 40 index and the broader All Share index fell by approximately 0.13% and 0.19%, respectively, ending Tuesday at 72,502 and 79,430 points. Meanwhile, Nedbank Group reported an 8% increase in half-year headline earnings, thanks to strong non-interest revenue, lower impairment charges, and tight cost control. Additionally, AngloGold Ashanti increased its first-half dividend by 450% due to higher gold prices and increased production.

EUROPEAN MARKET COMMENTARY

European shares rose on Tuesday, bouncing back from the previous day's losses, with energy and technology stocks leading the way. Positive corporate earnings boosted sentiment, and stronger-than-expected German industrial orders provided hope for Europe's largest economy, which is facing potential recession after a contraction in the second quarter.

US MARKET COMMENTARY

The S&P 500 and Nasdaq rose by 1% on Tuesday as investors returned to the market after a dramatic sell-off, with comments from Federal Reserve officials easing recession fears. The Dow also increased, but all three major indexes lost some gains before the close. Fed policymakers dismissed concerns that weak July jobs data indicated an impending recession but cautioned that interest rate cuts might be necessary. The next significant event for the Fed is Chair Jerome Powell's speech in Jackson Hole, Wyoming, on August 22-24.

ASIA MARKET COMMENTARY

Asian markets rose this morning, led by a rebound in the Nikkei, after the Bank of Japan indicated it would not raise interest rates during market volatility, causing the yen to drop sharply. Japan’s Ministry of Finance revealed record yen-buying interventions, selling $40.32 billion worth of dollars on April 29 and $26.38 billion on May 1, to support the yen. BOJ Deputy Governor Shinichi Uchida confirmed the central bank's reluctance to raise rates in unstable markets. Traders will also analyse China's July trade data, expecting exports to grow by 9.7% year-over-year and imports to rise by 3.5%, reversing June's 2.3% decline.

CURRENCY MARKET COMMENTARY

The South African rand remained stable on Tuesday as global risk sentiment improved following fears of a possible U.S. recession on Monday. The dollar regained ground against most major currencies, and the Japanese yen steadied near seven-month highs against the dollar, bringing some calm back to markets. In the cryptocurrency market, Bitcoin rose 4.26% to $56,725, recovering from a nearly six-month low of $49,445 reached on Monday.

COMMODITY MARKET COMMENTARY

Gold prices dipped this morning as the U.S. dollar and Treasury yields strengthened, though expectations of a September rate cut from the Federal Reserve helped limit the decline. Oil prices fell in early Asian trading after a brief rebound, as industry data revealed an unexpected increase in U.S. crude oil and gasoline inventories, which offset worries about global oil supply.

 AngloGold Ashanti PLC (ANG) +6.04%

For the quarter ending June 2024, the company reported a gold income of $1,353 million, up from $1,137 million in the same quarter of 2023. Cost of sales decreased slightly to $893 million from $910 million, leading to a gross profit of $467 million, significantly higher than the $253 million recorded in the previous year. Profit before taxation rose dramatically to $413 million from a loss of $16 million. Adjusted EBITDA nearly doubled to $684 million from $356 million. Total borrowings increased to $2,299 million from $2,091 million. Profit attributable to equity shareholders was $253 million, or 60 US cents per share, compared to a loss of $83 million, or 20 US cents per share, last year. Headline earnings were $255 million, or 60 US cents per share, up from $16 million, or 4 US cents per share. Net cash inflow from operating activities doubled to $420 million from $199 million, while free cash flow turned positive at $183 million, compared to a negative $44 million. Capital expenditure by subsidiaries was $250 million, up from $226 million, and joint venture capital expenditure was $36 million, up from $24 million.

Nedbank Group Limited (NED) +3.99%

For the six months ended June 2024, headline earnings rose by 8% to R7 911 million, and revenue increased by 4% to R35 159 million. The credit loss ratio improved to 104 bps, while total operating expenses grew by 8% to R19 775 million, resulting in a cost-to-income ratio of 55.3%. Diluted headline earnings per share increased by 12% to 1 650 cents, with headline earnings per share up by 11% to 1 699 cents and basic earnings per share up by 12% to 1 700 cents. An interim dividend of 971 cents per share was declared. Net asset value per share rose by 2% to 23 097 cents, and the common-equity tier 1 ratio remained stable at 13.3%.

Homechoice International PLC (HIL) -1.96%

Shareholders are advised that the basic earnings per share (EPS) and basic headline earnings per share (HEPS) for the current period are expected to range between 179.6 cents and 208.4 cents, representing an increase of 25% to 45% compared to the EPS and HEPS of 143.7 cents reported for the prior period. The Group’s summarised interim financial results for the six months ended 30 June 2024 are expected to be released on the Stock Exchange News Service on or about 18 August 2024.

Uber Technologies Inc. (UBER) +10.93%

Uber reported strong second-quarter earnings on Tuesday, exceeding Wall Street expectations. The stock rose about 6% at market open. The company posted earnings per share of 47 cents versus the expected 31 cents, and revenue of $10.7 billion compared to the anticipated $10.57 billion. This represents a 16% increase from $9.23 billion a year earlier. Uber's mobility unit saw a 23% rise in gross bookings to $20.6 billion, delivery bookings increased by 16% to $18.1 billion, and the freight unit remained flat at $1.27 billion. CEO Dara Khosrowshahi anticipated around 20% growth for the second quarter due to continued expansion in mobility and higher frequency of food and trip orders from subscribers. For the third quarter, Uber expects bookings between $40.25 billion and $41.75 billion, with the midpoint slightly below analysts' estimates. Adjusted earnings are projected to be between $1.58 billion and $1.68 billion, with the midpoint slightly above the average estimate. The company also reported $1.02 billion in net income for the quarter, including a $333 million pretax benefit from revaluations of its equity investments.

Rivian Automotive Inc. Class A (RIVN) +1.30%

Rivian Automotive surpassed Wall Street's expectations for the second quarter, reporting a loss of $1.13 per share, better than the anticipated $1.21 loss, and automotive revenue of $1.16 billion, above the expected $1.14 billion. Despite this, net losses increased to $1.46 billion, or $1.46 per share, compared to $1.2 billion, or $1.27 per share, a year earlier. Adjusted EBITDA remained at a loss of $860 million, consistent with the same period last year. Rivian reaffirmed its 2024 guidance, predicting 57,000 total units of production, a $2.7 billion adjusted EBITDA loss, and $1.2 billion in capital expenditures, while aiming for a positive gross profit in the fourth quarter. The stock, down 37% this year due to slow EV demand and high cash burn, rose 1.3% to close at $14.80 on Tuesday. Rivian's expenditures for the first half of the year totalled $537 million, including $283 million in the second quarter, and it ended the quarter with $9.18 billion in liquidity, comprising $7.87 billion in cash, cash equivalents, and short-term investments.

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