Uber: should you buy the stock on the stock market? – 01/19/2023 at 10:00
(Photo credits: Flickr – Robert Anasch)
Café de la Bourse puts Uber under the microscope. We looked at the group’s mission and ambitions, the details of its activities and its financial performance. We also looked at the technical configuration of the Uber share price in the stock market. Find our review and our opinion on the Uber segment.
Uber: mission and ambitions of the American mobility giant that changed urban transport
Uber is an American technology company founded in 2009 by Travis Kalanick and Garrett Camp. The company launched its ride-hailing service in 2010 in San Francisco and quickly expanded to many other cities around the world. Since its launch, Uber has enjoyed phenomenal success and has become one of the most popular and controversial technology companies in the world.
Uber’s goal is to become the world’s leading mobility company by providing a driver-passenger connecting platform that makes urban travel more efficient and affordable. According to its official mission, Uber wants to “give everyone the ability to easily, safely and affordably move people and things”. The company aims to be a leading form of transportation in cities around the world by providing affordable, safe and reliable transportation services to millions of people. In addition to people-transportation services, Uber has also branched out into other mobility-related businesses, including food delivery (UberEats) and electric bike and scooter rentals (Uber Jump). The company aims to be a major player in urban mobility and offer a full range of transportation services to meet all user travel needs.
What is Uber’s current strategy?
Uber has several ambitions and has defined a strategic plan to achieve these goals.
Expand your user base
Uber seeks to attract new users by providing affordable, safe and reliable transportation services in cities around the world. The company also aims to retain its existing users by continuously improving its services and offering targeted offers and promotions.
Expand its geographical presence
Uber aims to expand its presence in new regions and launch new activities in countries where it already has a presence. The company also aims to develop new collaborations and strategic partnerships with local and international companies to expand its reach and influence. As such, it has invested in several companies such as Grab, Didi, Zomato and Aurora.
Develop new technologies
Uber invests in research and development of new technologies that can improve the user experience and strengthen its competitiveness. For example, the company is currently developing self-driving and shared transit technology that could be used for its passenger transportation services in the future.
Improve the sustainability of its operations
Uber is committed to reducing its impact on the environment and promoting sustainable modes of transportation. The company aims to encourage the use of electric and hybrid vehicles and develop car-sharing programs to reduce traffic and greenhouse gas emissions.
Uber’s strengths and weaknesses
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Uber business overview
Uber is a technology company that develops and operates a platform that connects drivers and passengers around the world. It mainly offers passenger transport services by car, but it has also launched other activities over the years. Here is an overview of each of these activities and the percentage of turnover (turnover) they represent.
Mobility: UberX, UberPool and others (40% of turnover)
This is the historical activity of Uber and it consists in connecting independent drivers and passengers who want to travel in a private vehicle. Additionally, Uberpool allows passengers to share their ride and expenses with other passengers traveling to the same destination. UberPool is generally a cheaper option than UberX. Uber also offers other transportation services such as trips in luxury vehicles (UberBLACK), in vehicles adapted for people with reduced mobility (UberASSIST).
Food delivery with UberEats (48% of sales)
UberEats is an online food delivery platform that allows users to order food from local restaurants or chain restaurants using the UberEats mobile app. Users can browse restaurant menus, place orders, and track the status of their delivery in real time. Deliveries are made by independent couriers who use their own vehicles or travel by bicycle or on foot. UberEats is available in many cities around the world and works with a large number of restaurants to offer users a wide selection of meals.
Freight (12% of turnover)
UberFreight is an online freight transportation platform that connects companies that need to transport goods with independent carriers. Businesses can use the UberFreight app to find a carrier for their shipments and track their delivery in real time. Carriers can use the app to find shipments to transport and manage their delivery schedule. UberFreight is available in many locations in the United States and Europe. The platform aims to make the freight transportation process more efficient and reduce costs for businesses by using technology to simplify finding carriers and managing deliveries.
Basic Uber review
Uber results for the third quarter of 2022
Uber released its third quarter 2022 results on November 1. Growth proved more profitable with record adjusted EBITDA of $516 million, despite macroeconomic headwinds.
29.1 billion total bookings
Total bookings increased 26% year-over-year to $29.1 billion, or 32% in constant currency. In particular, mobility bookings reached $13.7 billion (+38% year-on-year or +45% at constant exchange rates) and gross delivery bookings of $13.7 billion (+7 % year-on-year or +13% at constant exchange rate). Rides in the quarter rose 19% year-over-year to 1.95 billion, or about 21 million trips per day on average.
Uber revenue up 72%
Uber’s revenue grew 72% year-over-year to $8.3 billion, or 81% in constant currency, as revenue growth largely outpaced booking growth due to Transplace’s acquisition of Uber Freight and a change in model of business for the mobility business in the UK.
Adjusted EBITDA at $516 million
Adjusted EBITDA of $516 million was up $508 million year-over-year. Adjusted EBITDA margin as a percentage of gross bookings was 1.8%, compared to 0% in the third quarter of 2021.
Net loss of $1.2 billion
The attributable net loss was $1.2 billion, which included a net loss of $512 million (before tax) primarily due to unrealized net losses related to revaluations of Uber holdings. In addition, the net loss included $482 million of stock-based compensation charges.
Cash of $4.9 billion
Cash and cash equivalents were $4.9 billion at the end of the third quarter.
Outlook for the fourth quarter of 2022
Estimates for the final quarter of the fiscal year are gross bookings growth of 23% to 27% year-over-year in constant currency and adjusted EBITDA of $600-630 million.
Technical analysis of Uber
Graphical analysis of Uber stock price
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Source: Café de la Bourse, graph generated on IG, data for information only
Technical analysis of Uber stock
Over the past 12 months, Uber shares have fallen 39.5%. At the same time, the Nasdaq 100 index – the American benchmark for technology stocks – fell by 30%. Uber shares were no exception to the general decline in technology growth stocks, which was explained by the increase in key interest rates to fight inflation. Uber’s share price started the year 2022 at the levels of 44 dollars (which is red on the graph) which it will remain for the rest of the time. The decline in Uber shares leaves a resistance level at $33.2 (in yellow on the chart) that will be tested three times throughout the year. Uber’s stock price is now hovering around the support level of $25 and the former support-turned-resistance of $33.2.
The trend for Uber stock is bearish in the medium term with the 50-day moving average (in black on the chart) below the 100-day moving average (in red on the chart). The trend is also bearish in the short term: the 20-day moving average (in green on the chart) is moving above the 50-day moving average. The MACD is negative and above the signal line and the stochastic RSI is in the neutral zone.
Our opinion on Uber stock
Uber continues its strong growth in the post-pandemic era, which is good news for investors. The mobility company has made a strong comeback after these setbacks related to mobility restrictions during the pandemic. The key question is whether Uber’s profitability will continue to improve. Uber’s booking growth is slowing, but the company is gradually reducing its losses, which still include large chunks from its investments in companies like Grab, Didi, Zomato and Aurora.
Uber expects to generate $600-630 million in adjusted EBITDA in the fourth quarter, indicating that its full-year adjusted EBITDA could easily top $1.6 billion. In addition, the company also reiterated its goal of generating $5 billion in adjusted EBITDA by 2024. Along with its race for profitability, Uber must contend with unpredictable regulatory headwinds on the status of drivers, in between self-employed status and salary. Buying Uber stock seems like a risky investment, but one with potentially great potential returns.
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