UBER - time to buy?

General question but I suspect not have used services from Uber at some point in time.

Right now, UBER is trading below its 2019 IPO price of $45.

With countries continuing to open up and people travelling more, I can only see the gig economy growing, and UBER are not yet in all markets so plenty room to grow still.

This is a bit of a gut feeling, but even googling for information, popular sites such as CNN have that 37/45 of their analysts rate this as a buy with the 12 month lowest target being higher than where it’s at today.

Don’t get me wrong there’s a couple of red flags - it’s not being run by it’s founder, and it is trimming its workforce, but this may not be a bad thing becoming a bit leaner.

I’m tempted to open a small position next week and let this gig economy share ride the stock market for the next 5 years or so and see where it ends up.

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Things to consider:

  • It’s at a multiple of 5-6 times sales
    -As it has grown it’s revenue, it’s net losses have grown also. If the trend doesn’t revert, when will shareholders get back their money? I guess if you decide to invest you have to believe that it will improve it’s margins dramatically.

Iirc they were profitable back in 2018. Still looking into it today with a view to invest next week :nerd_face:

Without going into TA as am sure loads of people can assist with that, my experience with Uber is going down the drain.

At first Uber was cheaper than taxis but not anymore here in the UK. Infact airport taxis will challenge you to compare their prices with Uber if you start negotiating prices with them.

So the only time am forced to use Uber is when i travel abroad and language becomes a barrier.

Correct, I jut checked on Marketwatch and they had a relatively small profit of just under 1B USD (on an 80B market cap), but you are correct. I didn’t remember them being profitable, but then it seems like they went back to large losses in 2019.

After some review I’m starting to think Uber might be a bit of a rudderless ship.

They have a good idea, but the founders have left and the new guard are still unproven.

They have also spent funds venturing into markets and since exited at cost.

Their cash management is also fairly poor.

For the size they are, they should be profitable but they’re not. They’ve grown so big it’s difficult to manage and they now have a lot of competition catching up, offering better rates.

They also have a clear lead in the US owning about 68% of the market, so a lack of profitability is concerning.

Perhaps this is suppressing the share price back to where it is, but I am also starting to struggle to see the growth drivers. Particularly now they are cutting staff. Perhaps they have reached peak capacity and overshoot the moon as it seems.

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Then there is the threat of unions in some of their markets demanding that drivers be considered to be employees and have benefits etc. Plus governments wanting to regulate prices, in my country there is a law that will be passed that will fix the price per kilometre that different classes of taxi services can charge and it’s a law that doesn’t look good for Uber, I assume the rest of the African Market will do the same.
And it looks like innovation has evporated from the company, still my preferred ride hailing service though.