Can Uber Continue Its Earnings Rally? Let's Look at the Chart
Uber (UBER) - Get Report stock was up about 4% on Frida after the company reported earnings.
Investors are surely cursing the stock already losing about half of its gains in the session. But remember, Uber stock jumped more than 11% on Thursday ahead of the report, following the better-than-expected results from Lyft (LYFT) - Get Report.
With that in mind, it’s impressive that Uber stock is even rallying on the day.
The rally comes despite Uber reporting a loss of $1.70 a share, missing expectations by 80 cents. However, revenue grew 14.2% year over year to $3.54 billion and beat analysts’ estimates by $170 million.
Further, management continues to talk about cost-cutting measures to get the business to profitability. That’s apparently enough to give confidence to investors and analysts.
Trading Uber Stock
Daily chart of Uber stock.
Chart courtesy of Stockcharts.com
In late-April, Uber stock was rejected by its 100-day and 200-day moving averages. While the ensuing pullback failed to hold support at prior resistance near $28, the 50-day moving average propped up the stock.
In the last two days, we’ve seen a burst of bullish energy from Uber stock. Shares have reclaimed the $28 level, along with prior moving average resistance. Shares are also clearing last month's high with the rally.
I love seeing powerful moves like this, as it gives investors a very clear roadmap to proceed.
First, we need to see prior resistance turn to support. Mainly, that’s the 100-day and 200-day moving averages currently between $31.25 and $31.75. If that’s true, then bulls have a reasonable risk/reward to bet on further upside.
On the upside, let’s see if Uber can rally to $34. There it finds a significant level over the past several quarters. This level most recently acted as resistance in February and March.
If Uber shares can clear $34, it puts the 78.6% retracement near $35.76 in play, followed by a possible gap fill up towards $40.
If moving average support fails, bulls may have little interest in sticking around. However, it will put the $28 level and the 50-day moving average in play. A close below the May low at $26.58 and Uber may continue lower.
