Uber Technologies, Inc.

UBER Details

Uber Technologies, Inc. (NYSE: UBER) is a digital business that connects passengers with drivers, hungry people with restaurants and food delivery services, and shippers with carriers. Self-driving cars, drone delivery, and Uber Elevate are all examples of innovative products and services developed using the company's on-demand technological platform.

Latest News:

• Partnership With BP: On March 29, 2022, BP and UBER launched a new global strategic convenience delivery deal, expanding their existing local arrangements to service more clients globally. The partners will offer a comprehensive range of high-quality convenience products from chosen retail locations, including fresh and prepared options. BP will be the first convenience retailer to join with Uber Eats to have over 3,000 retail locations available on the delivery platform within the next three years. In response to the increased demand for food, groceries, and everyday goods delivered to the door, the partnership will help BP boost consumer access and expand its delivery footprint.

Q1FY22 Results:

• Surge in Revenues: UBER's revenue increased by 136.10% to USD 6.85 billion during Q1FY22 (ended March 31, 2022), compared to USD 2.90 billion during Q1FY21, attributable to YoY growth of 195.19% in Mobility segment followed by 44.28% YoY growth in Delivery segment.
• Expansion-in Losses: During Q1FY22, the company had witnessed a surge in net losses to USD 5.93 billion vs. USD 108 million during Q1FY21.
• Leveraged Balance Sheet: As of March 31, 2022, the company had cash and cash equivalents of USD 4.18 billion and total debt of USD 9.27 billion.
• All-time High Gross Bookings: UBER reported a 35.39% growth in gross bookings to USD 26.45 billion in Q1FY22 from USD 19.54 billion in Q1FY21.

Key Risk:

• Geographic Concentration Risk: In FY21, only five metro regions in the United States, Brazil, and the United Kingdom accounted for 23% of UBER's gross mobility bookings: Chicago, Los Angeles, and New York City in the United States, Sao Paulo in Brazil, and London in the United Kingdom. Economic, sociological, meteorological, and regulatory characteristics in these big metropolitan centres impact their operations and financial consequences due to their spatial concentration.

Outlook:

• Q2FY22 Guidance: As of Q1FY22, UBER expects Gross Bookings of USD 28.5 – 29.5 billion, together with adjusted EBITDA of USD 240 – 270 million.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

UBER's stock price has fallen 49.44% in the past six months and is currently leaning towards the lower end of its 52-week range of USD 22.80 to USD 52.36. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 23.0098.

Considering the correction in the stock price, recent collaborations, growth in gross bookings, positive outlook, associated risks, and current valuation. We recommend a "Buy" rating on the stock at the current price of USD 23.0098, down 0.17% as of May 10, 2022, at 09:45 AM PDT.

Three-Year Technical Price Chart (as on May 10, 2022, at 09:45 AM PDT). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.