Opinions
Josh Brown, CEO, Ritholtz Wealth Management
Uber
UBER-N
STRONG BUY
Aug 23, 2024
Stock price when the opinion was issued
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Let it go after Q4 results. Concerned that it was reaching saturation in major urban markets. Talked about aggressively pursuing suburban market share, which is harder to serve and likely not as profitable. Slowing growth YOY. Major question marks about fledgling freight business.
New CEO in 2017 vowed to increase profitability, and it's materialized in operating margins, earnings, and cashflow. Thinks that will continue. Rapidly getting into self-driving, which apparently will dominate the space over the next number of years. Stock has a long way to go over next 5 years.
Chart shows fairly clear upward move. True leader in its nascent industry, has quickly become a very big part of our society. Stock's down today on news that LYFT has done a deal with Waymo for autonomous vehicles in Nashville. One-day news is just noise.
See his firm's blog under Insights at goodreid.com.
The knock is that self-driving cars are going to be everywhere, and you don't need an intermediary service like this one. But they're doing not only mobility, but also delivery and freight. Good partnership announcements to get into robotaxis. Share buybacks.
Not expensive at 21x, growing visibly at 37%. Lots more to go.
Technically, doing fine. Stock's moving higher, as is the 200-day MA. He worries about competition down the road, in particular autonomous vehicles such as Waymo. Diversified. Earnings growth for next few years somewhat muted. Trades at 30x PE, and it might get back to 15% growth, so the PEG is 2 (not exciting).
See his Top Picks.
Earlier this year, Elon Musk spoked the ride-share sector when he promised to then failed to unveil robo-taxis. For driverless taxis to work, you need mass demand which Uber has with its base of subscribers--Uber can fill these cards with riders. So this is a tremendous opportunity for Uber, though won't impact near-term earnings. It currently trades at a 32x forward PE (38x actually) with 30% forecast EBITDA, which sounds right. That forward PE is the lowest since Uber became profitable. RSI is 63 now, not overbought despite rallying. This will go north.