Opinions
Jim Cramer - Mad Money
Uber
UBER-N
BUY
Jan 06, 2025
Stock price when the opinion was issued
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We continue to like UBER. It's a large name, with a decent valuation of 22.6X forward earnings, forward growth epectations are decent, and analyst estimates continue to climb higher. We like its operating leverage, and it's now profitable with good free cash flow.
In a hypothetical scenario, where we had a US model portfolio, we could see it being in either the Balanced or Growth model portfolio, with a slight tilt towards the Balanced model portfolio.
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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.
Is up 151% in the last 2 years, but late-October they reported an imperfect quarter and closed the year -2%. Is the pullback deserved or not? Analysts are very mixed. KPMorgan is bearish, that valuations will be capped until Uber better addresses AVs (self-driving), or fears that Trump could pass laws that favour Tesla and Elon Musk. However, he notes that Uber doesn't build its own cars; others do. Bulls see growth in rides, particularly less-dense areas, such as outside London and Paris vs. those cities. Also, bulls say that the adoption of AVs will take years, a long time. Goldman Sachs sees a hybrid of humans and AVs in the sector. Also, Uber has huge cash flow and announced a major share buyback. Verdict: keep an eye on the AV competition like Waymo, but the last quarter had many huge positives, and the stock is cheap vs. its growth rate. Buying now is an opportunity at a discount.