After losing hundreds of millions of dollars and profitably being questioned by investors, with rising rates and a recession risk looming investors sold the stock, dropping to a low of 19.90, recently the company reversed the course and I think will change the trajectory of the stock, a huge beat on earnings, revenues surging 105% y/y, and the first positive ebitda quarter ever, with profitably expected in Q4 and record bookings, revenue also expected, all whole trading at 50% discount to the highs of 2021.
Gig economy stocks have been largely speculation, giving up profit for outsized growth burning through billions, ABNB, LYFT, UBER, all in a new segment for the economy.
Revenues climbed double digits in all geographical regions, ride sharing made up a majority of the upside, followed by Eats, and lastly Freight, an acquisition made in 2021 which has been doing very well with a lot of growth, but still making up a very small percentage of revenues.
I think Uber is the clear leader when looking between the rivals Uber and Lyft, with a positive cash flow expected this year, and record growth, but I also believe that Uber is in the best position to take advantage of self driving technology, which I think was also a big reasoning the hype for the IPO was so big, but even more so now since Freight is growing at a larger rate, as well as growing into 400,000 new gig workers.
The downside risks are apparent, inability to bring profitably or a breakdown of revenues could drop the stock by 50% in line with LYFT performance over the past 6 months.
The risk of recession weighs on the stock but recent indicators show we may avoid the worst of any recession to come.
If they can continue to grow you can see Uber surpass all time highs of 60$, right now Uber is trading at it's best valuation ever in my opinion, I've avoided the stock for years and watched the speculation run wild but with profitably coming soon I see now as the best risk reward, as well as solid execution by management.
I believe Tesla if they achieve self driving will be best to partner with Uber to scale the technology, I also believe Uber is a safer stock to own at a better valuation that Tesla.
Uber seems very undervalued, I know 2021 was insane for growth stocks but Uber is trading at twice the revenue, ebitda positive cash flow, profitability by q4 22 and expects even more growth in the quarters ahead with double digit growth in every geographical segment.
I intend to keep buying more calls to keep my exposure to my portfolio at under 5% and take advantage of what I believe is an undervalued stock. My target for 2023 is 80$.
Any input is appreciated.
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