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
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.