Why Uber and Lyft rallied last week

Heading into earnings season, you might have expected Uber and Lyft to suffer.

After all, global travel slowed toward the end of Q1, so how could these companies have done well? Continuing the same line of thinking, given that they are both unprofitable and are valued more on growth than trailing earnings, with growth slowing would there be much to celebrate?

The answer was a resounding yes." Uber and Lyft both rallied toward the end of last week following their successive earnings reports.

Today, let's go back and remind ourselves how Uber and Lyft performed against Q1 expectations and what they said about the hits they took in March (Q1) and early April (Q2). Then we'll ask ourselves why their shares rallied despite telling investors that their businesses had begun to fall sharply in the COVID-19 world.

(And, no, the answer to everything isn't Uber Eats. More on that at the end.)

Lyft reported earnings first, telling investors its Q1 results on May 6. Here's how they stacked up:

• Lyft lost $1.31 per share against revenue of $955.7 million in Q1.
• The firm missed expectations on profit (-$0.64 expected), and beat on revenue ($897.9 million expected).

Uber reported the next day. Here are its top-line numbers from May 7:

• Uber lost $1.70 per share in Q1 against revenue of $3.54 billion in Q1.
• The firm missed expectations on profit (-$0.83 expected), and beat slightly on revenue ($3.51 billion expected).