Uber Stock: Is It A Buy Right Now?

Uber Stock: The ridesharing leader closed Friday at $27.01 — 40% below its $45 May IPO price  — after its third-quarter earnings report showed the company continues to bleed cash profusely. The stock hit an all-time low of $25.58 on Wednesday after its post-IPO lockup period expired and insiders were allowed to sell their shares for the first time.

Despite the sell-off, there was some good news in the report. The company broke out its adjusted EBITDA by business segment and showed a surprising profit from its Rides segment, the company’s biggest business, excluding costs for corporate general and administrative expenses, and research and development. Adjusted EBITDA from Rides grew 52% in the quarter to $631 million. However, it delivered losses in every other segment.

Uber Technologies

Recognizing that the mood on Wall Street has changed following the collapse of WeWork’s planned IPO, Uber CEO Dara Khosrowshahi did his best on the earnings call to reassure investors that the company was on track for profitability. “Our current target with a ton of hard work from all of our teams is to get to total company EBITDA profitability for the full year 2021, as we see the benefits of global scale and efficiency,” he said.

Khosrowshahi’s statement echoed a similar one from his counterpart at Lyft (NASDAQ: LYFT): Just weeks ago, CEOLogan Green said Lyft would be profitable on an adjusted EBITDA basis by the end of 2021. That company took big steps toward that goal in its third quarter, scaling back on coupons and incentives for riders.

Uber Stock Price

Uber Technologies (UBER) is a global company that is transforming the ride-sharing and meal delivery markets. After a much-hyped debut on May 10, Uber stock is one of the most-watched IPO stocks today, but is Uber a buy right now in the current stock market?

Uber stock sold off in the wake of its disappointing earnings results on Nov. 4 and is back near its all-time lows. During midday trade on Tuesday (Nov. 5), shares tumbled more than 9% to hit a new all-time low of 28.25.

Previous Close 26.70
Open 26.47
Bid 26.73 x 4000
Ask 0.00 x 1000
Day’s Range 26.14 – 26.82
52 Week Range 25.58 – 47.08
Volume 31,879,091
Avg. Volume 14,544,720
Market Cap 45.562B
Beta (3Y Monthly) N/A
PE Ratio (TTM) N/A
EPS (TTM) -2.95
Earnings Date Nov 4, 2019
Forward Dividend & Yield N/A (N/A)
Ex-Dividend Date N/A
1y Target Est 45.00

Uber Stock Symbol

Shares of the ride-sharing company fell as much as 7.4% in early trading Tuesday after it reported it lost $1.1 billion in its third-quarter earnings release Monday.

The net loss overshadowed Uber’s reported $3.8 billion revenue, which beat Wall Street’s estimates, showing that investors are looking at the bottom line more than the top.

Here’s what the company reported, versus what analysts expected:

  • Earnings: -68 cents per share versus -63 cents per share (expected)
  • Revenue: $3.8 billion versus $3.4 billion (expected)
  • Net income: -$1.1 billion, in line with expectations

Uber’s stock price has struggled to stay above its first trading price since its May initial public offering, as investors are growing increasingly hesitant to back unprofitable unicorn startups that have yet to turn a profit.

“The controversy is around profit potential, heightened by the largest loss profile of almost any IPO,” wrote Mark Mahaney of RBC Capital Markets in a Friday note.

On a call with analysts Monday, Uber CEO Dara Khosrowshahi finally gave an update on the company’s path to profitability. Uber is anticipating turning a profit for the full year 2021, on an adjusted basis, he said.

The update comes after rival ride-hailing company Lyft announced that it would become profitable in the fourth quarter of 2021, one year sooner than Wall Street had expected. That announcement lifted Lyft shares 11% and sent Uber up 8% as well.

And even though Uber still posted a loss in the third quarter, the company is moving in the direction of profitability — its third-quarter loss is much smaller than the whopping $5.2 billion loss that the company reported in the second quarter of 2019.

“We’re pleased to see the impact that continued category leadership, greater financial discipline, and an industry-wide shift towards healthier growth are already having on our financial performance,” Khosrowshahi said in a statement.

Uber shares will soon face another test from the market. On Wednesday, the company’s post-IPO lockup expires, meaning that millions of more shares will be available to trade on the market.

It could “cause an avalanche of selling as early investors and insiders hit the bid, which remains a major Street worry around near-term pressure,” wrote Daniel Ives, an analyst at Wedbush, in a note Friday.

Uber is down more than 33% year-to-date, including Tuesday’s loss.

Uber Stock Ipo

Uber Stock Ipo

Uber is in the midst of a dramatic turnaround, as the company fights to turn a profit. In 2018, Uber had earnings of 59 cents per share, but the profit is expected to be temporary. This year, analysts expect a net loss of $7.11 a share, as the company continues to burn through cash. In the company’s first earnings results as a public company on May 31, Uber Technologies met the Street’s earnings and sales estimates. For the quarter, Uber reported an adjusted loss of 60 cents per share on revenue of $3.1 billion, up 20% vs. the year-ago period.

On Aug. 8, Uber reported weaker-than-expected earnings and sales results with an adjusted net loss of $4.72 per share on revenue of $3.16 billion. Unprofitable IPOs have more potential for aggressive investors when sales growth is significantly above 30%.

In the most recent quarter — reported on Nov. 5 — earnings declined 15% to a 68 cent-per-share loss on revenue of $3.81 billion. Sales grew 30% vs. the year-ago period. While the earnings and sales beat estimates, the company’s gross bookings fell short of analyst targets.

Uber Stock Price Today

The ride-sharing company’s stock broke out above the entry on June 5 but quickly dropped as much as 7.5% below the buy point on June 12. IBD readers are urged to cut losses when a stock falls between 7%-8% below the entry. Keeping losses small is a key way of making money long term in the stock market.

On June 27, Uber regained the 45.10 proper buy point in the IPO base, breaking out for a second time above the 45.10 entry. But once again the breakout move proved to be short-lived.

On Oct. 2, Uber stock reached an all-time low of 28.31, nearly 40% off its 47.08 post-IPO peak price. The stock may be trying to rebound from its lows, but has its work cut out ahead of it. No new buy point is evident yet.

Bullish Analyst Coverage

On June 4, widespread bullish analyst coverage boosted Uber stock. RBC Capital Markets commented, “Uber is the leading global player in massive ride-sharing and meal delivery markets.” Meanwhile, Needham initiated coverage with a buy rating and a 52 price target.

On June 7, Uber announced the departures of its chief operating officer and chief marketing officer.

On Sept. 16, HSBC turned bullish on Uber stock, upgrading the stock from hold to buy with a 44 price target. HSBC argued that the stock’s recent weakness offers investors the right price. Analyst Masha Kahn cautioned that the coming lockup expiration on Nov. 6 could create an “overhang” on the stock.

On Oct. 7, Citigroup upgraded the stock from neutral to buy, keeping the price target at 45. Analyst Itay Michaeli believes the company’s upcoming Q3 earnings results will indicate improving fundamentals.

Uber Stock Price Yahoo

Uber’s fate as a public company has faced so many setbacks recently that even its founder appears to have lost faith in the rideshare company.

Last week, Uber co-founder and ousted CEO Travis Kalanick sold more than $500 million worth of Uber shares as soon as the company’s 180-day lockup period expired, meaning that early investors and insiders were allowed to cash out their holdings.

SEE ALSO: This Rideshare Service Wants to Take You Back in Time With Just a Click

The former chief executive sold more than 20 million shares held in trust from Wednesday to Friday over last week, according to an SEC filing and first reported by CNBC on Monday.

Kalanick ignited his massive sell-off at a time when Uber stock was already at a rock bottom after the company reported a $1 billion loss for the third quarter.

Since its IPO in May, Uber’s market value had fallen from $70 billion to $45 billion as of last Friday. By the time of Kalanick’s cash-out, the paper worth of his stake in Uber had fallen more than 35% from May.

Uber CEO Dara Khosrowshahi has assured investors that the stock slump will be temporary and that the company is confident about turning a profit soon.

However, Kalanick doesn’t seem to have the patience for a rebound. Lately, the entrepreneur has been busy setting things up and running his new venture, virtual kitchen startup CloudKitchen, which is partly funded by Saudi Arabia‘s sovereign wealth fund, Public Investment Fund (PIF).

Uber Stock Quote

The end of the lockup period, which is 180 days after the company’s lackluster IPO, means that insiders, including early investors and employees, are free to sell shares. It comes just after Uber released its third-quarter earnings report on Monday, where the company continued to report steep losses while providing more transparency by breaking out metrics for its various business lines.
Uber shares hit a record low of $25.58 when the market opened Wednesday after hitting a previous low of $27.97 on Tuesday. Shares bounced back to nearly $27 per share, or 40% lower than its IPO price of $45.
“We believe it will be an avalanche of selling from early investors and insiders as this train wreck since the IPO continues,” said Dan Ives, an analyst at Wedbush Securities. “We estimate roughly 763 mm shares will be unlocking with roughly 25% at a big risk of selling over the coming days. It’sr been dark days for Uber but after this week, the lockup overhang will be in the rearview mirror and the stock should rebound from here.”
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Since going public in May, Uber has struggled to win over investors who are concerned about the company’s history of losses and newer concerns about the viability of its Uber Eats business. As the company faces pressure to clean up its finances, it has restructured its operations. The company has gone through two rounds of layoffs since its IPO, with the most recent round in September impacting 435 positions on its product and engineering teams.
Meanwhile, as the lockup period expires, some of the company’s drivers are planning to protest outside the homes and offices of some key Uber investors in California on Wednesday. The protest follows other driver strikes this year, both leading up to, and after, the company’s IPO.
Both Uber and competitor Lyft have built their businesses on the backs of drivers. Like some other gig-economy companies, the two have long argued their drivers are independent contractors. That status has meant workers aren’t guaranteed the same rights as employees, such as a minimum wage, overtime, workers’ compensation, unemployment insurance, paid sick leave or on-the-job expenses. For companies, paying drivers is the biggest cost they can control. The two companies are helping foot the bill for a ballot measure that would exempt them from new California legislation, AB-5, that could make it more difficult to classify their drivers as contract workers.
“These protests will shine a light on the difference between investors who make billions, and drivers who make less than minimum wage, putting in countless hours and watching their cars depreciate in value every additional mile they drive,” said Gig Workers Rising, an organizing group behind the driver strike dubbed “Deactivate Uber Billionaires,” in a tweet about the planned protests.
“This is the day when a handful of investors are likely to extract huge profits,” read another tweet from the group, which is calling on policymakers to “pave a way for drivers to unionize.”

What will Uber’s stock symbol be?

(GOOG), Microsoft Corp. (MSFT), Softbank (which can be bought OTC, the ticker is SFTBY), or private equity giant BlackRock Inc. (BLK). Given that Uber’s post IPO shares would become part of these investing company’s balance sheets, their stocks can realize strong gains when Uber’s private stock goes up.

Is Uber going public?

Uber will go public on Friday in a highly anticipated initial public offering that will be the largest since 2014 — and one of the biggest in U.S. history. After speculation that the ride-hailing company could be valued at as high as $120 billion, Uber is now targeting a valuation of $80 billion to $90 billion.

Who owns the uber stock?

Travis Kalanick – $5 billion

Travis Kalanick’s rise and fall as Uber’s founder and CEO has been well documented. He left the CEO job in summer 2017 (and launched a new company) and sold off a sizeable chunk of his stake to Softbank at that time.