Two and a half years later, UBER stays below its IPO price. The CEO buys. Here’s why the stock can gain 50%.

Uber Technologies, Inc. (UBER) is listed on May 10, 2019 with build, fanfare afterward, and management that promises big things to investors. This promise was not kept. After The Edge highlighted it should be avoided, CEO Dara Khosrowshahi confirmed Uber a few days later after the crackle and pop of the IPO

OVER
rocky trading debut, suggesting “tough trading days could last months”. It would be almost a year and a half before investors get their money back.

Over two and a half years later, the stock’s price is still below its $ 45 IPO, and this is fueling the fire that big IPOs with big media coverage are tools to get management, not shareholders, rich. In fact, as of the November of the same year it was listed, cofounder Travis Kalanick had sales of $ 1.7 billion, according to SEC filings, and he had sold 90 percent of his shares. Kalanick was dismissed as CEO under his leadership and replaced by Khosrowshahi in 2017 following allegations of sexual harassment and discrimination at Uber. From then on the stock fell further, reaching on the 18th they would be forgiven for getting out, the prospects were not good.

The turnaround in the environment and the subsequent vaccine-led rally (which helped the market including UBER) are still keeping investors underwater on their purchase, but now it may be time to recharge.

Dara Khosrowshahi went from being an Iranian refugee to being the protégé of media mogul Barry Diller, who helped him take over the reins of UBER in 2017 after the two Expedia successfully spun off.

After high profile CEO Khosrowshahi bought $ 9 million worth of shares, The edge (the leading research resource on underperforming Activist Equity, Special Situations and Spinoffs) believes there are significant benefits for investors willing to believe in the ridesharing vision. Khosrowshahi’s only other purchase was in November 2019 when he bought 200,000 shares for $ 26.75 and generated a six-month return of 30 percent, suggesting a positive trading history.

It is now a company with a market capitalization of $ 71 billion and a workforce of 26,900 people in over 785 metropolitan areas and 85 countries worldwide. Khosrowshahi is aiming to take Uber to new heights in 2022, and The Edge has predicted that this unicorn may have failed before but has changed its mind thanks to the CEO’s belief in the company’s future plans. Things are looking up for Uber as global takeover shows no signs of slowing. Khosrowshahi has partnered with Mark Zuckerberg in a partnership that will bring investors to the billions. Meta (the new name for Facebook’s empire) started with the launch Trial partnership with WhatsApp in India and if the rollout is successful it will go global, resulting in higher revenues in 2022.

Dara was an analyst and vice president of Allen & Company and was on the New York Times Company

NYT
, Expedia, and Catalyst.org so he has enviable connections and reach. He is a humble hero and is no stranger to admitting mistakes, which gives him a good reputation. He is known for helping the global refugee crisis after escaping the Iranian revolution when he was only nine years old.

He has real ethics and in August 2020 he wrote one Opinion article for the New York Times, insisted that “Gig workers want flexibility as well as convenience – we support laws that could allow this.”

The San Francisco-based company was also ordered to revise its labor practices in the United States Great Britain based on a ruling by the High Court. But Khosrowshahi apologized, saying, “On behalf of everyone at Uber around the world, I apologize for the mistakes we have made.”

The NYSE-listed company had 101 million monthly active users worldwide in the second quarter of 2021. In the US alone, Uber has a 68 percent market share for ridesharing and a 26 percent market share for food delivery.

Uber plans to soar high in 2023

Uber partnered and funded Joby Aviation with $ 75 million to develop all-electric, vertical take-off and landing passenger aircraft that could be operational in just two years. Under the name Uber Elevate, it will mark a significant shift in commuter air travel and enable future customers to seamlessly integrate ground and air travel.

Uber Eats brings profits to hungry investors

UBER’s Uber Eats (Food Delivery) platform is already a profitable business, and the company is increasing its investments in grocery delivery and courier services, placing it in seven out of ten markets where the courier company operates. The opportunity appears ripe for UBER to capitalize on the delivery business outside of restaurants by generating income from the advertising of these platforms.

Delivery is UBER’s next division that is seeing significant growth and could prove to be the company’s next step in expansion. Shipping gross bookings were up 50 percent year over year, with Adjusted EBITDA ($ -12 million) nearly off-setting.

Improvements over the Q3 results

In the wake of the COVID pandemic, UBER has seen growing pull as its latest third quarter results showed improvement in end-market performance. In the third quarter, Mobility gross bookings not only saw a 67 percent year-over-year growth, but also improved sequentially by 14 percent compared to the previous quarter. Airport travel shows an upward trend and has resulted in the division’s adjusted EBITDA returning to the positive side at 5.5 percent. This shows that traffic of mobility is returning to pre-Covid levels, which bodes well for the profitability of the business.

Conquer the globe, one country at a time

UBER’s inorganics like taking over rideshare and payment services from Dubai in 2020, Careem, which serves millions of users in the Middle East, North Africa and Pakistan, will continue to help UBER scale its operations and increase profitability. Aside from the completed Careem acquisition, its minority stakes are in Didi, Grab and Yandex

YNDX
. The taxi joint venture ensures steady growth of markets that UBER has left, but these companies continue to operate.

Make money Super APP Uber One

The hugely successful subscription service Uber Pass changed its name to Uber One and had six million members worldwide, and Uber Pass accounts for around 20 percent of gross bookings, which ensures higher engagement through the app as well as a higher number of visits / bookings per month with its Basket size increases over time. UBER has had tremendous success with Uber Pass in Taiwan with nearly 50 percent of its gross bookings there, demonstrating the volume of growth it can achieve globally to ensure a steady stream of recurring revenue.

Autonomous vehicles and Idea Flight give the go-ahead for Uber’s future

UBER reported a split (ATG and other technology programs), which was primarily responsible for developing and commercializing technologies for autonomous vehicles and ridesharing, and Uber Elevate. On January 19, 2021, UBER completed the sale of the ATG business to Aurora and also made a cash investment of $ 400 million in Aurora and entered into a collaboration agreement under which the parties will help launch and commercialize self. will work together – Driving vehicles in the UBER ridesharing network.

Uber plans to continue working with Aurora to effectively use its own network during the transition to autonomous vehicle technologies. The Edge believes that if successfully rolled out, UBER would not have to pay drivers and would balance its gross and net income, which would boost earnings growth tremendously. There would be no money to be shared with the drivers for every trip in the autonomous vehicle, which also fills up the coffers.

Regulatory review

It was only at the end of November 2021 that the Belgian court ordered UBER to cease operations in Brussels and most of Belgium. The order was an extension of a 2015 ruling by Belgian courts that banned private individuals from offering taxi services and should now also apply to professional drivers, which led to the discontinuation of the use of the UBER app in Brussels. In other cases, Europe’s highest court ruled in 2017 that UBER is to be treated as a transport service provider and must therefore comply with local taxi regulations. In the UK, UBER was forced to recognize drivers as employees and as a result had to give drivers some benefits such as vacation pay.

Omicron fears could hurt in the short term

Resurgence of the new Covid variant Omicron: Lockdown fears due to the Omicron variant of Covid lead to short-term volatility. Global mobility has just returned to normal, just like before the Covid era; However, the emergence of the new strain of Covid has resulted in new lockdowns in some global countries like Germany and Austria, and the announcement of travel restrictions in some other countries will affect the growth of mobility and airport traffic. Fear of a new wave of lockdowns affects the short-term forecast for UBER.

The Edge sees a price increase of around 50 percent in the stock. UBER’s strong upside potential compared to its peers, as well as its planned foray into the broader Metaverse space over time, provide compelling reasons to invest in UBER at the current level, aided by CEO Dara Khosrowshahi’s recent insider buying.

To request analysis from The Edge, look here.

The author of this article owns shares in UBER.