The Uber share price is up almost 17% this week after updated financial forecasts amid an array of market sell-off worldwide. Their EBITDA (earnings before interest, taxes, depreciation, and amortisation) forecast has decreased from $100M to $25M. Uber also announced that the profit margin for both their ride-hailing and food delivery services are improving.
A mixed 2021
Whilst the demand for Uber has been strong throughout lockdowns worldwide during the pandemic, the stock has been unstable. In the lead up to 2021, Uber had seen a nice rise of 42% after lockdown easing and vaccine rollouts. But this year, the stock has seen a high of $64.05 and a low of $38.08. Their IPO that released on 10th May 2019 opened trading at $42. The Uber share price is now at a similar level of $45.50. This updated forecasts from the management team seems to have changed the momentum of Uber which was bearish before.
Uber should continue to make progress even with the pandemic easing. In recent years, they struggled to be profitable as they were focusing on expanding into several new sectors. Management will now focus more on what they have and building strength. This is a good thing for the stock as an investment. When sustained profits arrive, the stock should really take off.
The demand for ride-hailing will only continue to grow in cities and large towns around the world. The connivence and low cost of the service makes it a better option than owning a car in some areas. Their other strong business model is their food delivery. The habits of the pandemic will continue into the future, with individuals and households ordering more and more meals rather than spending time making food for themselves. The revenue will grow. It is just a wait for Uber to reduce costs and increase their margins.
There is a lot of resistance at $52. If the price gets past that, $60 will be achieved, which would be an impressive gain of 30% from current levels.
One to add
I definitely think Uber is a buy at these prices with the management giving good news for the short term and a strong outlook for the future.