Uber Technologies, Inc.

UBER Details

Uber Technologies, Inc. (NYSE: UBER) is the technology platform provider of taxi, food delivery as well as transportation services. The company uses its proprietary platform to support a variety of services and solutions. As of March 31, 2021, Uber operates in approximately 71 countries, and markets outside the US accounted for approximately 79% of all trips. The company generates its revenue through three segments viz. 1) Mobility, wherein revenues are earned from fees paid by mobility drivers and end-users to use the company’s platform. 2) Delivery, where topline consists of fees paid by merchants and delivery people for using the company’s services. 3) Freight, which connects carriers with shippers on the company’s platform. As of June 30, 2021, Uber’s market capitalization stood at USD 95.01 billion.

On-Demand prescription delivery in Washington, D.C.: On May 13, 2021, Uber and Nimble, a prescription delivery service in the U.S., announced the launch of quick delivery of prescription medicines in Washington, D.C. within one hour. With this development, customers can also transfer existing prescriptions or get new ones from local pharmacies from the Uber Eats app.

Q1FY21 Results: The company reported a 10.62% decline in revenue to USD 2,903 million in Q1FY21 (ended March 31, 2021) compared to USD 3,248 million in Q1FY20. Uber reported an increase in loss from its operations to USD 1,524 million in Q1FY21 vs USD 1,263 million in Q1FY20, primarily due to excessive contribution of sales and marketing cost, during the quarter. The company reported a decrease in net loss to USD 108 million in Q1FY21 vs USD 2,936 million in Q1FY21, due to an increase in other income. Uber has never generated positive free cash flows.

Key Risks: Uber generated 22% of its Mobility gross bookings in FY20 from only five metropolitan areas i.e. Chicago, Los Angeles, and New York City in the United States, Sao Paulo in Brazil, and London in the United Kingdom, making it vulnerable to any economic downturns in these regions. Moreover, the company has incurred operating losses of USD 8.6 billion, and USD 4.9 billion in FY19 and FY20, respectively. As of March 31, 2021, Uber had an accumulated deficit of USD 23.2 billion and further expects its operating expenses to increase in the near future.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

UBER Daily Technical Chart

Stock Recommendation: UBER's share price has already increased by 61.26% in the past twelve months and is currently trading at a higher band of the 52-week range of USD 28.48 to USD 64.05. The stock is currently trading around its 50 and 200 DMA levels, and its RSI Index is 49.23. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 37.94. Considering the company's brand name, deterioration in fundamentals, negative cash flows, associated risks, and current valuation, we recommend an "Avoid" rating on the stock at the closing price of USD 50.12, down by 1.26% as of June 30, 2021.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.