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 company's on-demand technology platform is used to develop new products and services, such as self-driving cars, drone delivery, and Uber Elevate.

Latest News:

• Collaboration With BP: On March 22, 2022, BP and UBER announced a new worldwide strategic convenience delivery agreement, expanding their existing local arrangements to serve more customers worldwide. The partners will offer a wide choice of high-quality convenience products from select retail locations, including fresh and prepared options. BP is the first convenience retailer to partner with Uber Eats globally to have over 3,000 retail locations available on the delivery platform within the next three years. The collaboration will help BP increase consumer access and expand its delivery footprint in response to the rising demand for food, groceries, and everyday goods delivered to the door.

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: Only five metropolitan areas in the US, Brazil, and the UK accounted for 23% of UBER's gross mobility bookings in FY21: Chicago, Los Angeles, and New York City in the US, Sao Paulo in Brazil, and London in the UK. 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 expects Gross Bookings of USD 25 – 26 billion, together 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 34.06% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 28.28 to USD 59.22. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 34.57.

Considering the correction in the stock price, recent collaborations, strong market presence, positive outlook, associated risks, and current valuation. We recommend a "Hold" rating on the stock at the current price of USD 31.305, down 1.20% as of April 22, 2022, at 10:12 AM PDT.

Three-Year Technical Price Chart (as on April 22, 2022, at 10:12 AM PDT). Source: REFINITIV, Analysis by Kalkine Group

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: All forecasted figures and industry information have been taken from REFINITIV.  

Note 3: The report publishing date is as per the Pacific Time Zone.

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