Uber rallies after revenue beat despite adjusted earnings miss

What did Uber report?

Uber shares rose 4.9% on Wednesday to close at $69.87. The move added $6.7 billion to the company's market value, which now stands at $140 billion.

Why it matters: Third-quarter revenue came in at $14.77 billion, above the $14.70 billion Wall Street expected, the company reported. Adjusted earnings per share, or profit divided by the share count, were 88 cents. Analysts had forecast 96 cents.

By the numbers: Delivery did the heavy lifting. Delivery gross bookings, the total value of orders placed, climbed 22%.

Why did ride-hailing growth slow?

CEO Dara Khosrowshahi said rising fuel costs and driver shortages in several international markets held back Mobility, Uber's ride-hailing arm. Driver supply did not keep pace with demand in India and Brazil. Tighter immigration flows limited supply in Canada, he said.

Chief financial officer Balaji Krishnamurthy linked fuel costs to the war in the Middle East on the earnings call. "With the escalation in the war in the Middle East, fuel cost impacts have been felt globally," he said. He added that the effect is large in emerging markets, where riders and drivers are sensitive to price.

Khosrowshahi said Uber is cutting rider incentives this year and using that money to fund driver incentives. Fewer rider discounts could mean higher fares for some riders. He said the company will make trade-offs against profitability.

What could change next?

Management said Mobility trends improved in October. Uber is spending on driver recruitment and retention to ease the shortages, the company said. It also plans to add more fully driverless vehicles to its platform.

The open question is whether the earnings miss reflects a passing fuel shock or a lasting cost of keeping drivers on the road. Uber's next quarterly report could show whether October's improvement held.

The rally still leaves the stock 26.2% below its 52-week high of $94.67. In after-hours trading, shares edged down 0.1%.