Uber stock forecast: Facing a surge in operational challenges?
One of the leading ridesharing applications, Uber Technologies (UBER) is an American company that provides mobility as a service. Uber’s journey began on a cold evening in Paris in December 2008, when co-founders Travis Kalanick and Garrett Camp couldn’t hire a taxi. With its official launch in 2009, Uber has come to revolutionise how modern transportation operates globally.
Uber doesn’t own any vehicles. It makes use of technology to help people connect and move in over 70 countries and around 10,000 cities globally. It earns commissions from each Uber ride booking.
While it started out as only a ride sharing application, Uber has broadened its product offerings over time and now delivers food as well as other consumer goods through UberEats, Uber Connect and Uber Freight.
As of 25 April 2022, Uber had a market capitalisation of $61.93bn, and stood as the 254th most valuable company globally.
On 10 May 2019, Uber made its debut for public trading. Valued at $120bn by Wall Street analysts at one point, the initial public offering (IPO) was one of the most closely watched IPOs in the history of stock markets. However, the broader public response was underwhelming. With the Covid-19 pandemic bringing on global lockdowns beginning March 2020, Uber stock further dipped.
Uber CEO Dara Khosrowshahi commented on the company’s stock downfall:
On 9 February 2021, the company released its financial results for the fourth quarter and full year 2021. Uber reported revenues of $5.8bn for the year ending 31 December 2021, and reflected a year-on-year (YoY) growth of 83%, or 82% on a constant currency basis.
Since the beginning of 2022, the Uber stock value has tumbled by nearly 30%. Trading at $43.95 on 3 January 2022, UBER closed at $30.83 on 22 April 2022.
With economies slowly opening up after the effects of the pandemic, what does the future stock potential of this global ride sharing application look like? Join us as we gauge its share price trends, catch up on the latest Uber stock news and get analysts’ insights on an Uber share price forecast.
Uber stock analysis
Uber announced its financial results for the fourth quarter and full year 2021 on 9 February 2021. From its three reportable business segments of mobility, delivery and freight; an increase in gross bookings were reported all across.
The highest gross booking increase was observed in Uber’s freight business of 245%, up from $313m to $1.08bn. A major chunk of this increase was attributable to Uber’s acquisition of Transplace, the world’s largest managed transportation and logistics network. With the acquisition completed on 12 November 2021, Transplace’s contributions to Uber’s overall gross bookings is significant in Q4 2021.
On its mobility segment, Uber reported an increase of 67%, from $6.78bn to $11.34bn. With the effects of the Covid-19 fading, businesses picked up toward the end of 2021. Lastly, Uber’s delivery gross bookings showed an increase of nearly $3.4bn, or 34%, compared to 2020.
The top-line was reported at $5.77bn, which reflected an increase of 83%, or $2.61bn, from 2020 revenues of $3.16bn. Growth in Uber’s freight business stood at $396bn, indicating a 27% YoY increase. However, by way of acquiring Transplace, overall freight revenue grew by 245%.
The adjusted earnings before interest taxes depreciation and amortisation (EBITDA) for the company was reported at $86m, which was above the guidance range. As a result of relaxation in lockdown rules and people resuming working beyond their homes, the mobility business segment picked up in Q4 2021.
From $293m to $575m, Uber’s mobility business increased by 96%. The delivery segment, at $25m, reported its first adjusted EBITDA profits. While a loss of $25m was reported through the freight business, the acquisition of Transplace is expected to transform the company’s overall supply chain and logistics ecosystem.
Uber’s CEO Dara Khosrowshahi lauded the 2021 financial results:
A key indicator of Uber’s business performance remains its monthly active platform consumers (MAPCs), which indicates how many consumers were active on the platform. MAPCs grew by 27% in 2021, from 93 million to 118 million.
Overall trips booked through the Uber application also mirrored the platform’s growth. From 1.4 billion trips in 2020 to 1.7 billion trips in 2021, the overall number swelled by 23%.
Zero emissions platform and UberEats expansion
With a mission to become a zero-emission platform by 2040, Uber has formulated a Green Future program. By 2025, it plans to have a broad selection of its drivers transition to electric vehicles (EVs). By 2030, it aims to operate as a zero-emission mobility platform in the US, Europe and Canada.
On 5 April 2022, Uber announced the availability of its low-emission ride option, Uber Green across London. Earlier operating in Zone 1 of the UK’s capital, riders will have the option to request an EV Uber anywhere in Greater London at the same price as an UberX. London continues to top the global charts in utilising Uber’s EV option for booking rides.
In an effort to further expand on its delivery business segment, Uber announced a global strategic partnership with bp (BP) on 29 March 2022. bp offers a whole gamut of products ranging from groceries, flowers and ready meals.
By 2025, through this alliance, UberEats will have over 3,000 retail location options available on its platform. bp and Uber have also partnered on the latter’s mobility business. bp aims to be a net zero company by 2050 and facilitates EV charging arrangements for Uber drivers.
Uber stock forecast and technical analysis
Sharing a technical analysis on the Uber stock performance, Milan Vaishnav, CMT, MSTA, a consulting technical analyst at Gemstone Equity Research & Advisory Services, said:
At the time of writing on 25 April, algorithmic forecasting of Wallet Investor suggested that the Uber stock price target could fall to 0.000001 by December 2023. The site was bearish on the stock and didn’t offer a prediction of its future value for 2024 or 2025.
Based on the data compiled by Tip Ranks, out of 26 analysts, 25 rated UBER ‘buy’ and one a ‘sell’. Their consensus 12-month Uber stock future price target was $59.67. Their price varied from the low of $43 to the high of $80. The current analyst price target consensus has an upside of 93.54%, based on the last closing price of $30.83, as of 22 April 2022.
On 20 April 2022, Citigroup adjusted its Uber stock projection to $50 from $78, giving it a ‘buy’ rating. RBC Capital, on 21 March 2022, maintained its ‘outperform’ rating but decreased the price target to $50 from $65. Lastly, Loop Capital adjusted Uber’s price target to $55 from $70, while maintaining a ‘buy’ rating on 11 March 2022.
When looking for the Uber stock outlook, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Analysts’ forecasts are based on making fundamental and technical studies of the stock’s performance. Past performance is no guarantee of future results.
FAQs
Is Uber stock a good buy?
Since its IPO, Uber’s stock has recorded some record lows. With the pandemic, its core mobility business has suffered significantly. However, with the easing of global lockdowns and its strategic partnerships with entities like bp, recovery may be underway for Uber.
However, whether Uber stock is a suitable investment for you will depend on your own investment objectives, among other factors. You should conduct your own research and then make your own decision as to whether Uber stock is buy, sell or hold. It’s important to reach your own conclusion on a company’s prospects and the likelihood of achieving analysts’ targets. And never invest money that you cannot afford to lose.
Will Uber stock go up or down?
At the time of writing, according to Wallet Investor’s Uber stock prediction, the share price could dip as low as 0.000001 by December 2023.
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