Opinions
Jim Cramer - Mad Money
Uber
UBER-N
BUY
Jan 06, 2025
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.
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.