Bull of the Day: Uber Technologies (UBER)
Company Overview
Zacks Rank #1 stock (Strong Buy) Uber Technologies (UBER) is the worldwide leader in ridesharing services through its Uber mobile application.Uber is also a market leader in the food delivery business through its “Uber Eats” service and the freight business through its “Mobility” operations. Since going public in 2019, Uber investors have been subject to a wild, volatile ride. The company fell victim to COVID-19 restrictions, two brutal bear markets, and a market environment that has not been kind to IPOs. However, in 2023, the company has turned the corner.
Finally, in the Green
Uber is slated to report an annual profit for the first time since going public. Meanwhile, revenues are on pace to grow for a third straight year.
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International Expansion
Perhaps behind Uber’s years of unprofitability lies its intentions to scale. International growth is a driving force for increased revenues. In 2021, Uber acquired freight company Transplace for $2.25 billion – allowing the freight business to expand its tentacles into Mexico.
Uber Eats Business is Surging Due to Acquisitions
Uber’s management team has aggressively grown the company’s delivery business in the past three years through acquisitions. In December 2020, Uber purchased the popular food delivery app Postmates. Next, Uber expanded into the alcohol delivery business by acquiring Drizly. Most recently, the company inked a partnership with Domino’s (DPZ), the largest pizza chain in the world. When Uber reports October 10th, Zacks Consensus Estimates suggest earnings will grow by a healthy 121.31% year-over-year.
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Liquid, Institutional Quality Leader
Wall Street was just briefed on the latest 13F reports. A Form 13F is a report that large institutional investors must file quarterly. 13Fs give investors a rare window into the kind of stocks that the world’s savviest investors are trafficking in. In the most recent 13F Filing, Third Point’s Dan Loeb, Appaloosa’s David Tepper, and Saudi Arabia’s Public Investment Fund all held shares of Uber. Because of their sheer size and longer-than-normal time frame, institutional investors are a large market and stock-moving force worth observing and studying. Institutional investors like the ones mentioned above gravitate toward stocks like Uber because they have a rare combination of growth, liquidity, and innovation.
Uber is the Industry Leader
Uber and Lyft (LYFT) are the undisputed leaders in the rideshare industry. However, just because they share a duopoly of sorts doesn’t mean that they are equal. For example, Uber grew revenue by 14% year-over-year last quarter, while Lyft grew at a lackluster pace of 3%.
Another sign that Uber is the dominant player in the industry is its robust relative strength. Lyft is below its IPO price, steeped in a downtrend, and is drastically underperforming Uber. Remember, price action and performance are directly correlated with supply and demand. Investors clearly favor Uber over Lyft.
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Technical View
After a solid start to 2023, Uber shares are finding support at the 10-week moving average – a bullish sign.
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Bottom Line
International growth, acquisitions, and a post-pandemic return to normal have Uber firing on all cylinders. Adding to the bullish outlook over the next six to twelve months is strong institutional sponsorship, intriguing price and volume action, and robust relative price and fundamental strength versus its peers.
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Domino's Pizza Inc (DPZ) : Free Stock Analysis Report
Lyft, Inc. (LYFT) : Free Stock Analysis Report
Uber Technologies, Inc. (UBER) : Free Stock Analysis Report
