Though not lacking for attention or fanfare, Uber’s (UBER) stock is down nearly 12% since its disappointing debut on May 10 in one of the biggest IPOs in recent years. While venture capitalists and other inside investors were extremely anxious to see a strong opening, it seems regular investors weren’t so pumped. The company — along with Lyft — continues to lose money as it expands to new geographies and invests in self-driving technology, with some investors feeling the company has been boosted by venture capital money until this point.
However, Daniel Ives of Wedbush believes Uber is a real player, as he excitingly awaits its first-ever quarterly filing while on the public market. The analyst reiterates his Outperform rating on UBER stock with a $65 price target, which implies nearly 65% upside from where the stock is currently trading. (To watch Ives’ track record, click here)
Uber’s earnings are one day away, and the company is expected to post revenue of $3.04-$3.1 billion, with a loss of $1 billion the past quarter. But Ives says, “all focus from the Street will be around the underlying bookings and take rate metric outlook for the remainder of the year.”
Uber’s preliminary results shows its rideshare take rate decreased by about 200 basis points in the quarter, with Uber Eats also seeing a decrease in take rate. Ives believes Wall Street has been “expecting take rate compression as competition pushes irrationality and rider incentives in the near-term,” though the analyst expects “a focus on a path to improvement and accelerating revenue growth over the remainder of 2019 and into 2020…”
Even though the company has not gotten off to the best start on Wall Street, Ives continues “to see Uber as well positioned to capture a $5.7T opportunity globally on transportation which swells to $7-$8T when including third-party food delivery and freight/logistics.”
The analyst says a “core tenet” of his bullish rating is “around Uber’s ability to morph its unrivaled ridesharing platform into a broader consumer engine with Uber Eats, Uber Freight, and autonomous initiatives,” which is “‘just scratching the surface” of the full monetization potential.” So while the company continues to see losses, Ives sees this as an investment into the future, where Uber will be the go-to for many different transportation services.
All in all, investors weren’t thrilled with Uber when the company hit the public market earlier this month, but things could have started worse. Rival Lyft has seen its stock price plummet by more than 30% in only eight weeks. Granted, not everyone is as enthusiastic about Uber as Ives. Out of 6 analysts polled by TipRanks, 2 are bullish on UBER stock, while 4 remain sidelined. Worthy of note, the 12-month average price target stands at $53, suggesting the stock can rise nearly 34% over the next 12 months. (See UBER’s price targets and analyst ratings on TipRanks)