Uber Technologies, Inc.

UBER Details

Uber Technologies, Inc. (NYSE: UBER) is a technology company that connects passengers to drivers, hungry individuals to restaurants and food delivery services, and shippers to carriers. The firm's on-demand technology platform might potentially be utilized for additional products and services such as autonomous vehicles, drone delivery, and Uber Elevate. 

Latest News:

• Collaboration With Cardenas Markets: On March 1, 2022, Cardenas Markets announced that it had expanded its partnership with UBER to offer on-demand and scheduled grocery delivery across all 59 locations. Customers can now order authentic Hispanic recipes created daily by its well-known Cocinas and have them delivered on-demand to their homes through Uber Eats.

FY21 Results:

• Surge in Revenues: UBER's revenue increased by 56.70% to USD 17.46 billion during FY21 (ended December 31, 2021), compared to USD 11.14 billion during FY20, attributable to YoY growth of 114.19% in Delivery revenue driven by COVID-19-related stay-at-home order demand, increased food delivery orders and larger basket sizes, and continuous expansion throughout US and international markets.
• Reduction-in Losses: During FY21, the company had witnessed a decline in net losses to USD 496 million vs. USD 6.77 billion during FY20.
• Leveraged Balance Sheet: As of December 30, 2021, the company had cash and cash equivalents of USD 4.30 billion and total debt of USD 9.28 billion.
• All-time High Gross Bookings: UBER reported a 56.17% growth in gross bookings to USD 90.42 billion in FY21 from USD 57.90 billion in FY20.

Key Risk:

• Geographic Concentration Risk: In FY21, only five metropolitan areas 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. Because of their geographic concentration, economic, social, meteorological, and regulatory variables in these large metropolitan areas impact their operations and financial outcomes.

Outlook:

• Q1FY22 Guidance: As of FY21, UBER anticipates Gross Bookings of USD 25 – 26 billion, with adjusted EBITDA of USD 100 – 130 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 31.97% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 28.28 to USD 61.50. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 42.43.

Considering the correction in the stock price, recent collaborations, strong market presence, positive outlook, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 34.77, up 2.08% as of March 28, 2022.

Three-Year Technical Price Chart (March 28, 2022). 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.