Uber Technologies, Inc. (UBER) is finally gaining ground after a rocky year amidst the coronavirus pandemic. In the past month, Uber began an upward climb, outperforming the S&P 500 for the year and rising by approximately 76.6% compared to the S&P’s gain of about 14.5%. The company’s overall growth has helped its ranking on the WhaleWisdom Heatmap rise to seven from thirty.
Uber is an American company that serves customers worldwide and has evolved beyond ride-hailing to provide other services such as food delivery, package delivery, and courier services. The company also develops applications for road transportation, navigation, ride-sharing, and payment processing solutions. While the transportation industry has been negatively impacted by the pandemic, Uber has grown business for its Uber Eats food delivery business. In contrast, its ride-hailing division’s business has declined. The pandemic’s influence on consumers’ dining preferences and restrictions for restaurant dining has paved the way for increasing food delivery popularity and boosting this aspect of Uber’s financial performance.
Mixed Results from Hedge Funds and Institutions
Uber has drawn the interest of institutions, but hedge funds are selling. Looking at third quarter activity by the top hedge funds, the aggregate 13F shares held decreased to about 300.6 million from 313.2 million, a decrease of approximately 4.0%. Of the hedge funds, 45 created new positions, 69 added to an existing position, 41 closed out their holdings, and 56 reduced their stakes. In contrast to hedge funds, institutions were buying. Overall, institutions increased their aggregate holdings by about 5.0%, to approximately 1.3 billion from 1.2 billion.
Encouraging Multi-Year Estimates
Analysts appear optimistic with their estimates. It is estimated that year over year revenue growth for 2020 will initially decline by about 11.2% before increasing in 2021 by approximately 42.1%. Uber is then predicted to see revenue growth ranging from 24.7% to 42.1% in 2021 through 2023. Between 2020 and 2023, revenue could very likely grow from $12.6 billion to $28.9 billion.
The company is expected to lose money in 2020 and 2021 and then turn positive in 2022, bringing earnings per share to around $0.48. The company is expected to have a surge in earnings growth of 146.9% in 2023, bringing earnings per share to an estimated $1.20.
Strategic Business Moves Bring Optimism
Stifel Financial Corp. has a favorable outlook for Uber and raised its price target to $60 from $45 while maintaining a Buy rating on shares. Additionally, Mizuho Securities is also optimistic about Uber, raising its price target to $63 from $50 while keeping a Buy rating on shares.
Uber’s recent upward momentum in comparison to the S&P 500 has been eye-catching. While it’s uncertain whether pre-COVID commuting and travel volume will fully rebound once pandemic related travel restrictions and cautions are lifted. Uber appears well-positioned to continue to reap the benefits of increased demand for its food delivery services.