Check out the companies making headlines before the bell: Coinbase — Crypto-related assets surged after Bitcoin topped $40,000 for the first time this year. Coinbase jumped 7%, MicroStrategy gained 7% and Marathon Digital climbed 13%. Uber Technologies — The ride-hailing stock rose 4% after S & P Dow Jones Indices on Friday said it will enter the S & P 500, along with Jabil and Builders FirstSource . The three will replace Sealed Air , Alaska Air Group and SolarEdge Technologies . Shares of Jabil and Builders FirstSource were each higher by more than 2%. General Motors — Shares of the Cadillac and Chevrolet maker added 1.3% after an upgrade from Mizuho Securities, which said GM has bottomed and is poised for growth, particularly after the labor settlement with the United Auto Workers. Spotify Technology — Spotify rose more than 1% before the bell after the music streamer said it’s laying off 17% of its workforce as it looks to trim costs amid slower growth. The cuts total about 1,500 jobs, according to a CNBC source familiar with the matter. Spotify was 129% higher for the year as of Friday’s close. Alaska Air Group — The Seattle-based carrier slid 12% after agreeing to acquire Hawaiian Airlines for $1.9 billion. Alaska Air, which would pay $18 a share, would take on $900 million in debt as part of the deal. Hawaiian Holdings, Hawaiian Air’s parent, soared 182%. Alaska Air is also coming out of the S & P 500 index. Lululemon Athletica — Shares slipped 2.1% after Wells Fargo downgraded the athleisure company to equal weight from overweight. The bank said Lululemon’s positive catalysts have already played out, and forecasts more muted growth in 2024. Carvana — Shares jumped more than 5% after JPMorgan upgraded Carvana to neutral from underweight. The Wall Street firm said the online car retailer has bolstered productivity and made progress cutting costs. — CNBC’s Michelle Fox, Hakyung Kim, Pia Singh and Samantha Subin contributed reporting
Tag: Sealed Air Corp
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Uber shares pop on inclusion in S&P 500
Dara Khosrowshahi, CEO of Uber, speaking on Squawk Box at the WEF in Davos, Switzerland on Jan. 18th, 2023.
Adam Galica | CNBC
Uber shares rose 5% in extended trading on Friday after the ride-hailing company was added to the S&P 500 Index, replacing Sealed Air Corp.
The change will take place prior to the open of trading on Monday, Dec. 18, according to a press release.
A company’s stock price often rises on news that it’s joining the S&P 500 because fund managers who track the benchmark, which gets updated each quarter, have to acquire the shares. Companies also have to meet certain valuation and profitability requirements.
Uber shares debuted on the New York Stock Exchange in 2019, but the company was burning cash as it had to pay drivers enough money to stay competitive in a low-margin business. Its preferred metric was adjusted earnings before interest, tax, depreciation and amortization, or EBITDA.
Most of Uber’s adjusted EBITDA comes from mobility, but the company made its delivery business profitable faster than planned, after recession-fearing investors became more averse to investing in money-losing companies. Growing advertising revenue has also contributed to Uber’s profitability.
Uber eliminated more than 3,500 jobs in 2020, and executives have since worked to improve its cost structure. For example, they reduced the cost of deliveries. Uber reported net income of $221 million on $9.29 billion in revenue in the third quarter, and in the past four quarters altogether, it generated over $1 billion in profit.
“Nelson [Chai, Uber’s outgoing finance chief] and my goal is to build a company that can compound top line rates at very, very attractive rates and continue to improve margins over a period of time,” Uber CEO Dara Khosrowshahi told UBS analyst Lloyd Walmsley at an investor meeting in December 2021. “You’ve seen those long-term compounders and margin increasers and, you know, the greats of the world, the Googles, the Facebooks, the Microsofts of the world, and we aspire for no less.”
According to S&P’s rules, members of the index must have positive earnings in the most recent quarter and over the prior four quarters in total. Constituents of the index must have an adjusted market cap of at least $14.5 billion.
Uber has a market cap of about $118 billion, while the median market cap of companies in the S&P 500 is just over $31 billion.
WATCH: Uber into the S&P 500