After months of speculation, the time has finally come for Uber (UBER).
Today, the ride-hailing giant’s stock began trading on the New York Stock Exchange at $45 per share, with a market cap of more than $82 billion. While below the $100 billion many expected — and the $120 billion rumor last year — Uber nonetheless will IPO at the third-highest valuation, behind Alibaba and Facebook.
Wedbush analyst Ygal Arounian believes the stock will Outperform, and has a $65 price target, which implies nearly 46% upside from where the stock is currently trading. (To watch Arounian’s track record, click here)
Uber’s offering comes days after rival Lyft released its first-ever quarterly update, which sent its stock plummeting. Overall, Lyft — which went public about five weeks ago — has had a poor showing on the public market, down about 30%. But Arounian sees “Uber’s conservative pricing as a smart and prudent strategy coming out of the box as it clearly learned from its ‘little brother’ Lyft, and the experience it has gone through over the past month.”
But while Uber may have learned from Lyft, the two companies are inherently different. While both are known for providing the same service, Lyft only operates in Canada and the US, while Uber has a global reach. Further, Uber has many revenue streams and is widely viewed as a transportation company that is “paving a similar road to what Amazon did to transform retail/ecommerce and Facebook did for social media.”
Furthermore, Uber’s transformational potential is what is so attractive to Arounian. The analyst says, “a core tenet of our bull thesis on Uber is around the company’s ability to morph its unrivaled ridesharing platform into a broader consumer engine with Uber Eats, Uber Freight,” while it’s self-driving car “initiatives [are] ‘just scratching the surface’ of the full monetization potential of this platform over the next decade.”
Looking at ridesharing, Eats, autonomous and its Other Bets, the analyst believes the company has a slew of opportunities ahead of it in ridesharing, logistics, food delivery, and healthcare (e.g., hospitals and insurance providers) that make it a unique investment opportunity.
All in all, many investors may be nervous from Lyft’s terrible start, while others see Lyft’s terrible start a result of Uber’s impending offering. Nevertheless, one thing is certain: Uber’s value will be proven over the long term, not short term. The company’s success hinges on autonomous driving and becoming profitable, which will only come in time.
Read more: Lyft (LYFT) Stock Looks Like It Can Rally Back to $78, Says Analyst