Uber Technologies, Inc. (UBER) has been on a rocky path over the past year and a half, and the gains realized over the past six months appear to have stalled. The ride-sharing company’s stock has recently fallen, bringing it into alignment with the S&P 500. Uber rose by approximately 40.4% as of late August 2021 compared to the S&P 500’s gain of roughly 39.2% since the start of 2020.
Uber faced its share of challenges throughout the coronavirus pandemic due to government-imposed travel restrictions. However, despite the negative impacts of the pandemic, Uber recently ascended in the second quarter to a rank of 10 on the WhaleWisdom Heatmap.
Hedge Funds Are Active
Uber received positive attention from hedge funds, which increased their aggregate 13F shares held to approximately 522.0 million from about 514.5 million in the second quarter, representing an increase of roughly 1.5%. Of hedge funds, 51 created new positions, 123 added to an existing one, 51 exited, and 80 reduced their stakes. In contrast to hedge funds, institutions decreased their aggregate holdings slightly by about 1.0% to approximately 1.37 billion. The 13F metrics from 2019 through 2021 suggest that Uber’s investment potential remains steady, despite ups and downs.
Encouraging Revenue Estimates
Analysts appear optimistic with their revenue estimates, though earnings estimates are less rosy. It is anticipated that year-over-year revenue growth may range from approximately 44.5% to 25.9% between 2021 and 2023, which could bring revenue to about $28.4 billion by December 2023, up from an estimated $16.1 billion in December 2021. Earnings per share will initially decline in 2021 and 2022 before extraordinary year-over-year growth of 723.3% is predicted for 2023, bringing earnings to $0.43.
Mixed Reactions After Disappointing Second Quarter
Many analysts lowered price targets amid disappointing second-quarter results. Doug Anmuth from JP Morgan & Co. kept an Overweight rating on the stock and lowered the firm’s price target to $72 from $74. Anmuth believes that the recent selloff of shares creates an attractive long-term opportunity. Wedbush Securities analyst Ygal Arounian lowered the firm’s price target to $51 from $66, maintaining an Outperform rating on Uber shares. Oppenheimer & Co. analyst Jason Helfstein lowered their price target on Uber to $70 from $80 and kept an Outperform rating on shares, acknowledging Uber’s efforts to address driver supply challenges through driver incentives. However, Jefferies analyst Brent Thill is optimistic for better third and fourth quarter performance and kept a Buy rating and $75 price target on the stock following second-quarter results.
Optimism Beyond 2021
Customer demand for travel and meal delivery services remains in flux as the pandemic continues; however, it seems likely that the foundation of Uber’s business, ride-hailing, and ride-sharing, will ultimately see a rebound in demand. Increased coronavirus vaccination rates and the promise of boosters against variants will certainly help consumer mobility recover over time. Uber has taken strategic steps to strengthen its driver supply and incentivize its workforce in the interim. Uber may not be a buy for all investors, but it holds possibilities for investors seeking a long-term opportunity.