Ride-sharing leader Uber (UBER) has been on the comeback trail ever since the pandemic restrictions started loosening.
An avatar of the recovery narrative; as soon as there were places people could go again, they started calling Uber for rides. Not that Uber let grass grow under it during the pandemic. The delivery trade made some solid inroads and now it’s contributing to a better future. A new move is giving Uber a little extra life, and the company’s growing diversification gives me reason to be bullish.
A look at Uber’s year so far shows a company in a surprising state of decline. The early part of the year was marked by volatility. (See Analysts’ Top Stocks on TipRanks)
The company’s share price wavered between just under $50 to just over $60 from January until late April. However, it was May that saw the decline start in earnest. The company went from almost $60 to nearly $40 in the space of about two weeks.
A rebound to $50 kicked in, but that started another slide that saw Uber shares go under $40 for the first time that year. Another recovery brought the company up over $45, and that held for about six weeks. Then, mid-November saw another slide, slight recovery, and another slide to get us where we are today.
The latest news should serve as help to get Uber back up. It’s partnered with CLEAR to bring its ridesharing app to CLEAR’s “Home to Gate” systems.
CLEAR is a secure identity company that offers some help with traveling; the Home to Gate system runs real-time analysis of traffic data, security screening wait times, and more to tell travelers when they should leave for the airport. Uber, meanwhile, steps in to offer travelers an Uber ride scheduled for that exact time.
Wall Street’s Take
Turning to Wall Street, Uber has a Strong Buy consensus rating. That’s based on 19 Buys and one Hold assigned in the past three months. The average Uber price target of $69.55 implies 90.8% upside potential.
Analyst price targets range from a low of $50 per share to a high of $82 per share.
A Good Time to Get In an Uber
When a company is trading so far below even its lowest price targets, that suggests a potential opportunity in the works. Analysts are all looking for the company to be trading close to double what it is right now.
Sure, there are some problems with Uber right now. There’s an issue with some transgender drivers, for example; Uber considered the post-transition photos they uploaded to be “fraudulent,” which left some drivers unable to work.
Uber remarked that the company had “misrouted” some update requests, which explained the issue. Transgenderism is a hot-button political issue right now, so this may come back to hurt Uber in the end.
There’s also the ongoing issue of just how to classify Uber drivers. With Proposition 22 in California turning Uber drivers from independent contractors to employees, that handed Uber a massive new tax bill. Similar legal fights have cropped up in cities from Albany to London, and the damage could be substantial.
The good news, if you can call it that, here is that all the problems Uber faces will also be faced by its competitors. Uber won’t be particularly hobbled by these issues.
Rather, it will be just as hobbled as everyone else. So that means Uber can focus on its positive points and ramp them up accordingly. Uber not only ferries people from place to place, it also ferries goods.
That makes for solid diversity. As we saw with the pandemic, it’s also a great way to beat pandemic restrictions. That makes Uber that much more likely to survive under such conditions, should they come back.
Concluding Views
Uber’s diversified approach to the transportation market serves it well. The delivery business is good any time, and it downright shines in lockdown conditions.
The cost of that shine, of course, is the loss of an income stream. When there are no lockdowns, the delivery business loses ground but isn’t completely shuttered. Meanwhile, other income streams kick in to make delivery a brisk side business. The new connection with CLEAR demonstrates that Uber isn’t stagnating, either.
The company has a solid Plan B for almost every set of market conditions, and it’s the leader in its field in many ways.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
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