Opinions
Jim Cramer - Mad Money
Uber
UBER-N
BUY
Jan 06, 2025
Stock price when the opinion was issued
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Has grown cashflows, very encouraging. Taking share from LYFT. Over several years stock's been volatile, but hasn't done that much due to looming robotaxis and autonomous vehicles. If that picks up steam, competitive dynamics change; UBER would move from handling both supply and demand, to being just one of many suppliers chasing demand.
Multiple's come down, showing good fundamentals. Watch the space. Waymo has no experience in the space, whereas Uber's really well positioned. That partnership will work well at first, but it's the future he's concerned about.
Largest ride-sharing and delivery company in the world. Great business model. His son at university uses it all the time (and Richard's paying for it). New CEO has done a spectacular job. Profits are on the rise. Ride-sharing is slightly less than 1% of all driving, massive opportunity ahead. Expanding to smaller cities. Robotaxis are in their future. No dividend.
(Analysts’ price target is $88.64)Missed 2 key metrics. Past year has been quite sideways, more of a trading stock. Above 200-day MA, but that 200-day MA has been quite flat. Forward earnings estimates have ratcheted down a bit, but you're still paying ~30x forward PE. That's problematic. 200-week MA seems to be steadily moving higher.
Longer term, will face lots of competition in the space as well as regulatory risk.
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.